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Nokia (NOK) shares are down 20 cents, or almost 5%, at $4.03 after Barclays Capital's Jeff Kvaal cut his rating on the stock to Equal Weight from Overweight, and chopped his price target to $4, writing that a sharp decline in the company's older "Symbian" phones and a "gradual" rise in its new "Lumia" phones suggests a "tougher transition" for the company than he had thought.

Kvaal writes that he's been "highly encouraged with both the pace and internal progress at Nokia" since Stephen Elop took over as CEO over a year ago and struck a deal with Microsoft (MSFT), with the company showing "crisp execution."

But given the company disclosure on Wednesday that sales of Lumia phones in Q1 totaled 2 million, below his 3.5 million estimate, and given that "the decline in core feature phones is worse than anticipated," writes Kvaal, "we can no longer expect a near-term recovery."

Wednesday's negative preannouncement raises concerns that despite what still could be a successful turnaround of the company in the long run, near term pressures are rising and are both clouding and lengthening this uncertain transition period. With this lack of visibility and what clearly will be another year of significant earning declines, we downgrade Nokia to 2-Equal Weight/2-Neutral from a 1-Overweight given four primary concerns:

Regarding Lumia, which runs Microsoft's "Windows Phone" operating system software, Kvaal is concerned there's not much upside to his outlook:

The Lumia launch, with only 3mn sold, has not yet attracted significant consumer interest. We include a strong Lumia 900/610 launch in estimates with Lumia units doubling q/q to 15m by 4Q12 and 29m for 2012. Upside seems limited to ~35mn and would only result in ~7% upside to our 2012 sales and EBIT forecasts – clearly not enough to offset the weakness in mobile phones.

Kvaal cut his 2012 smartphone estimate for Nokia to 52 million units, down from a prior 63-million estimate, and cut his estimate for average selling price to $150 from a prior $153.

His new estimate for the total company for 2012 goes to €31.25 billion in revenue from a prior €35.4 billion, and EPS goes to a net loss of €0.18 per share from a prior estimate for a profit of 7 Euro cents.