* Reports Q2 earnings 1000 GMT
* Seen falling into red, outlook in focus
* One-off gains, writedowns could cloud real earnings
* Apple, Sony Ericsson saw strong Q2 smartphone market
* Nokia's 15-year reign in smartphones nears end
By Tarmo Virki, European Technology Correspondent
HELSINKI, July 21 Investors braced for more
bleak news from smartphone laggard Nokia Oyj on
Thursday with the world's largest handset maker likely to post a
second-quarter loss and a weak outlook.
Nokia is due to report second quarter earnings at 1000 GMT.
The Finnish company created the smartphone market in 1996
with its first Communicator model but has failed in recent years
to mount a serious challenge to the surge from Apple Inc's
iPhone and Research In Motion's BlackBerry.
On Tuesday Apple reported forecast-beating earnings
while Sony Ericsson (ERICb.ST) and HTC
have also signalled strong smartphone demand.
Nokia Chief Executive Stephen Elop has been pinning
turnaround hopes on new smartphones using Microsoft
software, but these will only come to market later this year.
Nokia's share price has halved since February - when it
unveiled the shift to Microsoft - on worries the company will
lose so much market share before the new phones come out that it
might never recover its footing.
In May, Nokia said second-quarter results would be well
below its previous outlook and ditched full-year targets.
To hold on to customers, Nokia has slashed the prices of its
old smartphone line-up from the start of the third quarter, a
move which is expected to weigh on margins.
Smartphone troubles are expected to drag Nokia to a second
quarter underlying net loss of 10 million euros ($14.2 million)
from a 419 million profit a year ago, according to the average
forecast in the Reuters poll of 27 analysts.
Analysts' estimates vary widely in part due to a one-off
royalty payment from Apple. Some expect a payment of up to $650
million from a legal battle settled in June, while others see
much smaller income.
Nokia has said also Microsoft would pay it billions under
the smartphone deal, but it is unclear whether any portion of
that would be included in the second quarter.
The company is also due to book a large restructuring charge
for job cuts in its phone business. It could also announce
additional job cuts at its telecom gear arm Nokia Siemens