Nokia, the world’s largest mobile phone manufacturer, released their second quarter results earlier today which indicated a 64% drop in profits, indicating that the company may be struggling with innovative new offerings from smartphone rivals Apple and HTC.

The Finnish company seems to struggle to produce smartphones rivaling that of RIM, Apple and HTC. Raising further tensions within Nokia is rumours that its CEO, Olli-Pekka Kallasvuo, may soon be replaced.

Bengst Nordstrom, CEO of Northstream, a mobile industry consultant commented in the New York Times, “Nokia’s problems are big and serious. The emergence of the iPhone and the Android operating system have made that all too clear. Nokia was not prepared for either one. They are clearly not the same industry leader they have been for the last 30 years.”

The mobile phone giant revealed today that profit fell to 104 million euros, from 287 million euros for the same period last year while sales rose only 1%.

Nokia’s share price has fallen almost 40% since the 7th of April, signalling bad omens to investors worldwide.

The company said that the decline in profit was partly due to an “industry-wide component shortage”, which is expected to continue into the third quarter.

There is hope on the horizon in the form of the Nokia N8 though, as Mr. Kallasvuo said in a statement that the new smartphone, running on its new Symbian 3 OS will be the catalyst for the revival of its smartphone lineup.

He also added that the new handset will be followed by others which will give the platform broader appeal and reach to kick-start Nokia’s fightback at the rest of the market.

Nokia remains the world's largest manufacturer of cellphones producing 111.1 million units during the second quarter, up 8% from last year.