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Nokia N8 Hit By Manufacturing Problems

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HELSINKI — Nokia Corp. said Friday its top N8 model, aimed at making up lost ground in the smart phone market, has had power problems with some handsets not turning on after recharging.

The fault was limited to "a small number of handsets" and will be fixed in line with Nokia warranty rules, Nokia spokeswoman Eija-Riitta Huovinen said. She gave no details of whether the problem was regional or how many handsets were affected.

"We've had a lot of positive feedback about the N8. This problem involves really a small number," Huovinen said.

The N8, which looks like Apple Inc.'s iPhone, features a 12-megapixel digital camera with Carl Zeiss optics and a 3.5 inch display. It is built on Symbian 3, a new version of the Symbian software with photo uploading connections to social networks like Facebook and Twitter.

Available also in North America, Nokia's worst market, the N8 was meant to compete with the iPhone that has set the standard for today's smart phones and Research In Motion Ltd.'s BlackBerrys that are the favorite of the corporate set.

More recently, Google Inc.'s Android software has also emerged as a choice for phone makers that want to challenge the iPhone.

And the N8 has been beset with problems.

It was unveiled in April with deliveries expected in the summer but Nokia did not start shipping it internationally until the end of September.

The latest fault, though relatively small, comes at a bad time as the fourth quarter traditionally means strong growth in the wireless industry.

"This doesn't help the Nokia brand, that's for sure. The problems have been mounting for the past few years and every little negative headline adds to that," said Neil Mawston from London-based Strategy Analytics. "It's not a great start for their supposed iPhone or Android killer."

Nokia's share price closed down more than 1 percent at euro7.40 ($10.12) on the Helsinki Stock Exchange.

In September, Nokia replaced its Finnish CEO Olli-Pekka Kallasvuo with Microsoft executive Stephen Elop, a Canadian, the first time the company appointed a non-Finn at its helm.

The choice of a North American executive to lead a Finnish company was seen as reflecting the increasing dominance of U.S. and Canadian companies in the evolution of the top end mobile phone business.

The N8 is selling at European retailers for some euro460-euro600 ($625-$820), and can be ordered on Nokia's Web site for euro500.

Mawston said that in America it has an edge on the latest iPhone in price.

"The N8 is pretty competitive. Very similar in specifications to the iPhone 4 at roughly half the price," Mawston said. "The iPhone is roundabout the $650 level and the N8 is about the $300 to $350 level."

Nokia reported a third-quarter net profit of euro529 million, up from a net loss of euro559 million last year, but said it had lost market share to 30 percent in the period – from 34 percent in 2009.

Despite setbacks, it is still the global leader in handsets, including smart phones, selling 26.5 million smart phones in the quarter – up 60 percent on a year earlier. Its closest rivals, Apple sold 14 million and RIM 12.5 million.

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Online:

http://www.nokia.com

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