Nokia earnings decline

October 19, 2001 Posted: 1700 GMT

LONDON (CNN) -- Nokia said Friday third-quarter profit fell 18 percent but the results at the world's largest cell phone maker came in a bit better than investors had expected.

The Helsinki-based company said earnings fell to 760 million ($684 million), or 0.16 a share, in the quarter, from 923 million, or 0.19, a year earlier. Sales fell 7 percent to 7 billion.

Analysts polled by Reuters had expected the company to post a 25 percent fall in third-quarter profit due to weak demand and more competition for mobile products. The company said Sept. 11 its earnings per share would match forecasts of 0.14 to 0.16.

The company now expects fourth-quarter earnings of 0.18 to 0.20 a share, compared with the previous forecast of 0.25. But analysts welcomed the guidance, given the gloomy sentiment in the telecom and tech sectors due to the economic slowdown that has been exacerbated by the Sept. 11 attacks on the United States.

Nokia's net profit skidded 79 percent to 186 million, or 0.04 per share, for the July-September period from 892 million, or 0.19 per share, a year ago.

Nokia and other wireless companies have suffered from a year-long slowdown in the U.S. and global economies, driven primarily by a dramatic reduction in capital spending.

Nokia (NOK: up $1.01 to $19.79, Research, Estimates) shares, which have fallen in value by more than half this year after four financial target revisions, jumped 5.5 percent in Helsinki and its U.S. shares also rose more than 5 percent in midday trading on the New York Stock Exchange.

CEO Jorma Ollila said he expects market conditions will stabilize and the company expects to reach a 40 percent share of mobile phone sales worldwide.

In a teleconference with analysts, Ollila said Nokia would be helped by the recent launch of several new models as well as the market stabilization.

The company warned last month that third-quarter sales would fall as mobile operators delayed rolling out new networks. Sales of Nokia Networks, including base stations and antennas, fell 14 percent to 1.66 billion.

"On the infrastructure side, the ongoing technology transition and economic stability have led some operators to further postpone network investments," the company said Friday.

European telecom operators spent more than $100 billion snapping up third-generation mobile phone licenses that give them the right to offer Internet, video and e-mail services. But that has proved to be a costly exercise as investors dumped stock in the heavily indebted sector, forcing many to delay upgrades and roll-out of the new high speed wireless services.

"The network infrastructure market will continue to be challenging, especially for the first quarter of 2002," the company said. "Despite a continuing lack of visibility, the company expects network sales in the second half of next year to be significantly higher than the first half, as sales resulting from ongoing 3G deliveries start to have an impact from the middle of 2002."

Third-quarter sales of mobile phones declined 3 percent to 5.3 billion, with growth in Asia Pacific and the U.S. offsetting sales declines in Europe as many consumers decided not to upgrade handsets ahead of the launch of 3G services.

Nokia now forecasts worldwide mobile phone sales for the entire industry in 2001 will be about 390 million units, down from a previous forecast of 405 million. Its fourth-quarter sales of mobile phone are expected to be close to the level a year ago.

Nokia reiterated its 2002 forecast of reaching a sales growth of 25 to 35 percent some time next year.

	Want the full story? Search for free company info...
	Enter Company Name:-