Can Nokia come out of red in Q2?

Mobile phone giant Nokia Corp may report lower profit and sales when it reports second-quarter numbers Thursday, aggravating investor concerns for a leadership change to revive its fortunes in smartphone market.

Nokia is expected to earn 15 cents a share on revenue of $12.74 billion, representing about 29 percent drop in profit and 6 percent decline in sales, according to analysts surveyed by Thomson Reuters.

Meanwhile, Zacks investment research estimate a profit of 14 cents a share on 11 percent drop in sales.

All eyes will be on handset margins, the company's outlook for future quarters and update on its pipeline of smartphones.

Nokia had posted weaker than expected earnings for its first quarter in April.

In mid-June, the company lowered its profit outlook, citing among other factors "the competitive environment, particularly at the high-end of the market."

Analysts may also ask about the release of its newer version of Symbian software that powers its high-end models.

Earlier, the company had aimed to roll out a new version of its main Symbian operating system in the second quarter, but now isn't expected to release the software until later this summer.

Nokia, which has about 40 percent market share of cell phones in use, has been cutting prices and sacrificing profits to defend its market share.

The company, though, has a strong market in Europe and developing countries like India, it sells mainly lower priced models in those regions that has been a drag on its margins.

Apart from the results, investors will be looking for any clue over change in top management that is being rumoured amid eroding margins.

Nokia is said to have launched a search to replace Chief Executive Officer Olli-Pekka Kallasvuo as it is losing ground to rivals such as Apple Inc. and Research in Motion (RIM) in the smartphone market, the Wall Street Journal reported yesterday.

The Finnish firm has lost market share to rivals such as Apple Inc. and RIM in the smartphone arena, and also to other manufacturers modeling their handsets based on Google's Android platform.

Nokia has been unable to deliver a device that could compete with Apple's iPhone, RIM's BlackBerry and other smartphones running on Google Inc.'s Android software. Nokia's last hit smartphone was the N95 model.

Nokia shares closed at $9.01 Tuesday on the NYSE.