Nokia lowers second quarter sales forecast
HELSINKI, Finland (AP) – Nokia, the world’s biggest cell phone maker, warned Tuesday that its sales will fall rather than rise in the second quarter compared with a year ago but said its earnings will be in line with previous estimates. Nokia’s shares finished with a gain of 5.9 percent to 14.10 euros ($12.70) after initially dropping 4 percent at the Helsinki Stock Exchange after the revised outlook was issued. Analysts focused on the steady earnings forecast.
“Based on developments during April and May, the company sees second-quarter net sales declining by about 2 to 6 percent, compared with the earlier guidance of 2 to 7 percent yearly growth,” the company said in a statement.
The new forecast put net sales within the range of 6.9 billion euros to 7.2 billion euros ($6.5 billion to $7 billion).
Nonetheless, Nokia said its earnings per share would be within a range of 0.18 euros to 0.20 euros (17 cents to 19 cents) which was in line with previous forecasts.
Jussi Hyoty, an analyst at the FIM Banking Group, said that despite recent fears about prospects for the telecommunications industry, “today’s report was somehow reassuring. It shows that the fears have been exaggerated.”
Nokia, which is to release its second-quarter results on July 18, had been expected to lower its sales guidance amid continued weakness in the telecommunications industry.
That and warnings issued by some of its suppliers sent the company’s share down to a three-year low on the Helsinki bourse last week.
The biggest change in the mid-quarter update concerned sales of the Nokia Networks division, which the company expected to decrease by 20 percent to 25 percent, instead of the previous estimate of 5 percent to 10 percent, due to cautious spending by operators.
The company’s chief financial officer Olli-Pekka Kallasvuo blamed disappointing sales in China and in Europe for the lowered forecast in the networks division.
“In both markets, we have had a situation where estimating has been difficult,” Kallasvuo said in a conference call, adding that the situation in the United States hasn’t changed.
Nokia said it believes its market share in mobile phone sales to increase to 38 percent for the second quarter.
It also predicted that the number of handsets that it sells will increase more than 10 percent from a year ago, with the total market volume growing 5 percent from the first quarter’s total of 89 million.
Last year, the group’s net profit fell 44 percent to 2.2 billion euros ($1.9 billion) from 3.9 billion euros in 2000. Sales rose 3 percent to 31.1 billion euros ($27.6 billion).
Nokia, which is based in Espoo just outside the capital, Helsinki, has operations in 130 countries and 54,000 employees.