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Nokia (NOK1V.HE: Quote, Profile, Research, Stock Buzz) blamed price-cutting by rivals for its loss of market share this quarter, but its warning may be a sign that profitable growth at the rates the industry has been enjoying is nearing its limit.

Coming at the end of a week in which the world’s top wireless chip maker said it was seeing signs that consumer demand for phones was slowing, the news from Nokia, the world’s biggest cellphone maker, sent out waves of alarm to investors primed to flee at the first sign of trouble.

Nokia has lost more than 18 percent of its value since August 29, including an 8 percent plunge for its U.S. shares on the New York Stock Exchange on Friday.

Although most analysts agreed the market reaction was overdone — Nokia shares fell to their lowest level in nearly three years — there was bad news for the wider industry in the company’s short statement and later conference call.

Nokia cited weaker consumer confidence in several markets after bearish comments from chip makers Qualcomm (QCOM.O: Quote, Profile, Research, Stock Buzz) and Texas Instruments (TXN.N: Quote, Profile, Research, Stock Buzz) earlier in the week payday loans. The phone maker said it was facing tougher competition in entry markets, its powerhouse in recent years.

“It took time for Nokia to feel the pain because they are in a better place. Motorola (MOT.N: Quote, Profile, Research, Stock Buzz), Sony Ericsson (6758.T: Quote, Profile, Research, Stock Buzz)(ERICb.ST: Quote, Profile, Research, Stock Buzz) and LG (066570.KS: Quote, Profile, Research, Stock Buzz) already started feeling it in Q1 and Q2,” said Gartner analyst Carolina Milanesi.

“I think the bottom line is that if even Nokia is feeling the pain, then the market is really in trouble,” added Milanesi, the research firm’s chief handsets analyst.

Nokia said it was protecting its profit at the price of losing market share if necessary, saying it had made a tactical decision not to be drawn into a price war. 

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