Reporting first-quarter earnings this morning, the world’s largest maker of mobile phones fell short of expectations for both sales and profit. Though sales rose for the first time since the second quarter of 2008, they did not meet consensus estimates. Where analysts were looking for 9.69 billion euros, Nokia (NOK) delivered just 9.52 billion. And at 14 cents a share, adjusted earnings missed a consensus forecast for earnings of 15 cents.

There was some good news amid the bad, though. Nokia sold 21.5 million smartphones during the quarter, up 57 percent. That’s quite an improvement over last quarter, though as growth rates go, it pales compared with the 131 percent jump in iPhone shipments Apple (AAPL) reported earlier this week.

In any event, Nokia’s struggle to return to its former glory in the highly competitive mobile market is far from over. Said CEO Olli-Pekka Kallasvuo: “We continue to face tough competition with respect to the high end of our mobile device portfolio, as well as challenging market conditions on the infrastructure side.”

That’s not going to change any time soon, particularly in the smartphone market, where Nokia lags far behind its rivals. As Gartner (IT) analyst Carolina Milanesi notes, “Everyone else has caught up and Nokia has been left behind.”

And while the company is doing its damnedest to catch up, things just don’t seem to be working out. Indeed, this morning, Nokia said it is delaying the launch of its first Symbian 3 devices from the second till the third quarter.

“We will not ship these products before the quality meets the end user’s needs and demands,” Kallasvuo said during the company’s earnings call. “It’s a painful thing to delay something a bit. I am aware of that. But at the same time meeting the quality requirements is the right thing to do.”

Disappointing news given that these are the handsets intended as rivals to Apple’s iPhone and to some of HTC’s Android devices. Pushing their launch date out is going to put the company under enormous pressure toward the end of the year as we head into the winter holidays.

Said Milanesi: “Nokia catching up becomes less hopeful because of these delays. Competition will only get tougher in the second half with the run up to Christmas. We have to see what kind of rabbit they can pull out of the hat.”

Wall Street’s reaction to today’s news? A nasty beating. As of this writing, Nokia shares are trading down nearly 13 percent at $12.86.

“According to reliable information, Apple will not follow the current market trend (by producing netbooks with screens about 10.2 or 10.1 inches in diagonal length.) Instead, Apple will produce screens with about 9.7 inches in diagonal length. Touch screen will be installed. Wintek will be the main manufacturer of the touch screen.”

Beyond screen size, there are no other specifications mentioned in the report. But it does include a price: $800. Which is $300 more than the $500-piece-of-junk price point Apple CEO Steve Jobs cited when he dismissed netbooks last October. “There are some customers which we chose not to serve,” Jobs said at the time. “We don’t know how to make a $500 computer that’s not a piece of junk, and our DNA will not let us ship that.”

But will it allow Apple to ship an $800 one? Perhaps something with a P.A. Semi chip? Something that runs App Store apps and offers a sort of middle ground between the iPod touch and the MacBook?

UPDATE: Piper Jaffray analyst Gene Munster just weighed on these rumors in a research note. His thoughts, below:

On 7/13 Asian media reports suggested Apple is planning a tablet/netbook in Oct-09. Last week we spoke with a Taiwanese component supplier and continue to believe that Apple will launch a tablet, not a netbook, by early CY10. … We expect [it] to be a touchscreen device in the $500-$700 range (between the iPod Touch and MacBook).

[Image Credit: Adam Benton]

It’s also apparently raised Palm’s profile as an acquisition target. Says Abramsky, “Given Pre’s and webOS’s competitive advantages and the rising importance of the Smartphone market, we foresee Palm’s rising attractiveness as an acquisition candidate.” The companies most likely to consider it as such: RIM (RIMM), Microsoft (MSFT), Nokia (NOK), Samsung, LG, Sony Ericsson, Hewlett-Packard (HPQ) and Dell (DELL).

Quite an endorsement–especially for a company that hasn’t yet launched the product capable of working the restorative magic Abramsky describes.

Palm shares are up well over two percent this morning at $8.07.

Fascinating.

Clearly, demand for the handset, the first based on Google’s Android operating system, is far greater than anyone had expected. Earlier this month G1 manufacturer HTC estimated that T-Mobile would sell between 400,000 and 500,000 G1 handsets before the end of 2008. That the company may have already sold three times that amount to customers willing to buy the device without any real hands-on experience suggests the G1 may manage to hold its own against Apple’s iPhone. Apple (AAPL), as you may recall, sold one million iPhone 3Gs during the first weekend the device was on sale.