Nokia’s Q1 sales are expected to be down when accounced tomorrow – despite the success of its 5800 XpressMusic smartphone launched last year.

Analysts estimate 2.5 million 5800s may have been sold in the first three months of the year – helped by repeated sell-outs in the UK and roll-outs into new markets.

Key to the Nokia smartphone’s success is its cost – often undercutting the iPhone while offering comprehensive features.

Despite the device’s strong sales, however, the Finnish mobile giant is expected to report a drop in overall shipments of 20 per cent, with revenues around USD $12.6 billion.

The company had sales of USD $16.4 billion in the fourth quarter of 2008.

While Nokia remains the leading global mobile maker, its position has been under fire recently – not least in the smartphone category where the iPhone and BlackBerry have nibbled at its market share.

However, there may be positive news for Nokia. Some analysts expect the company to announce that it has reduced inventory levels from the fourth quarter of 2008, raising the prospect of an upswing in the second quarter.

Recent measures have seen Nokia streamline its operations, cutting 1,700 jobs worldwide and temporarily suspending outsourcing for handset manufacturing.

Nokia is also expected to provide more details tomorrow on reports that its joint venture with Siemens is bidding for parts of Nortel Networks’ CDMA carrier networks business.

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