UPDATE 2-RESEARCH ALERT-Credit Suisse cuts Nokia to underperform

(Adds details; broker action on RIM, Motorola and Qualcomm)

Sept 1 (Reuters) - Credit Suisse downgraded Nokia Oyj (NOK1V.HE) to "underperform" from "outperform" and removed it from its Europe Focus List, saying the world's top cellphone maker was likely to lose smartphone market share in 2010.

Nokia's smartphone share of 45 percent in the second quarter of 2009 is unsustainable despite recent stability and upcoming product launches, given competitive pressures from Research in Motion Ltd (RIM.TO), Apple Inc (AAPL.O) and a slew of new Android-based devices, the brokerage said.

"Specifically, we expect Nokia to lose significant share in Western Europe and Central Europe, Middle East & Africa (CEMEA) with its global smartphone share falling to 35 percent in 2010," Credit Suisse said, cutting its price target on the stock to 8.50 euros from 12 euros.

Apple, RIM, and possibly Palm Inc PALM.O would gain, but other vendors, including HTC Corp (2498.TW), LG (066570.KS), Samsung Electronics (005930.KS), and Sony Ericsson Mobile Communications (SEMC), could struggle due to less focused software strategies and weak distribution, it said. However, longer term, as the smartphone market gravitates toward lower price points, Nokia will be well positioned to leverage virtues such as intellectual property rights (IPR) position and chipset efficiency that will become increasingly more important, it added in a note to clients.

Still, over the next 12 months, Nokia's software and services evolution will be too slow to prevent a decline in smartphone market share, the brokerage said.

Credit Suisse also downgraded Qualcomm Inc (QCOM.O) to "neutral", given the stock's limited upside to its price target of $50, while raising RIM and Motorola Inc MOT.N to "outperform."

The brokerage upgraded RIM given its pure play exposure to smartphones, and sustainable market share and margins through 2011.

At Motorola, it expects a break-up story to re-emerge as the devices segment approaches breakeven by late 2010, even with modest success of upcoming smartphones. (Reporting by Mary Meyase in Bangalore; Editing by Aradhana Aravindan)