Nokia delays N7 handsetNokia plans to delay shipments of its high-end flagship E7 smartphone until early next year, missing out on the critical holiday selling season and adding another blemish to its recovery efforts.

Nokia's (NOK) confirmation of the delay Tuesday sent its shares down as much as 1.6% at one point in morning trading to $9.80 a share, though they have since recovered.

The world's largest mobile-phone maker had expected to ship its new handset this month but decided to hold off to "allow the best possible user experience," says a company spokeswoman without explaining what the exact problem that was creating the delay.

Nokia's other flagship phone, the N8, was also delayed this year and finally got out the door in late September. The high-end N8 was designed to rival Apple's (AAPL) iPhone and Motorola's (MOT) Droid X. The E7 is a similar version but with a slide out keyboard.

Nokia was slow to respond to the iPhone threat, waiting three years to come out with a high-end touch-screen device. The company earlier this year swapped out its long-time CEO for one with a software background, hiring former Microsoft executive Stephen Elop to lead the way.

Elop apparently learned it may be better to wait till a phone is ready for prime time before shipping, following complaints that some of the N8 phones failed to turn on after recharging.

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