re: Wireless Earnings Week & Reuters Poll on Nokia
- Motorola October 15
- Nokia October 17
- Ericsson October 18
>> Nokia Seen Hitting Q3 Goals, Focus on Color Phones
Brett Young
Helsinki
Reuters
10/11/02
Rising mobile phone sales spurred by new color-screen models will boost third-quarter earnings at Nokia, offsetting a dismal showing by its struggling networks unit, a Reuters poll showed on Friday.
[All figures in this poll are on a pro forma basis. Contributing to the poll were analysts from Alfred Berg, CAI Cheuvreux Nordic, Carnegie, Conventum Securities, Credit Lyonnais, Daiwa-Europe, Danske Securities, Deutsche Bank, Enskilda, Evli Bank, FIM Securities, JP Morgan, Mandatum Stockbrokers, Merrill Lynch, Nordea Securities, Opstock and UBS Warburg.]
The world's largest handset maker is expected to report on October 17 a 10 percent rise in pro-forma third-quarter pre-tax profit to 1.18 billion euros ($1.16 billion) year-on-year, analysts predicted.
Nokia, a bellwether for the wireless sector, is again seen outperforming peers in terms of market share and profitability despite tough markets because of its firm grip on costs, partly through job reductions, outsourcing of production and brand.
Its earnings are sandwiched by quarterly reports from global number two handset maker Motorola on October 15 and mobile networks leader Ericsson on October 18.
Nokia has given numerous sales warnings this year as demand for phones and particularly for mobile networks equipment from telecom operators slacken due to the weaker global economy and the frail state of the wireless sector in general.
The Finnish company, which makes more than one in three phones sold globally, was hurt earlier this year by a lack of attractive handsets, but the recent release of new models is expected to help perk up revenues.
Analysts expect Nokia to meet targets given in its mid-quarter update in September and to post earnings per share of 0.17 euros and net sales of 7.27 billion euros.
On Friday Nortel, one of the world's largest telecom equipment makers, cheered the market by reconfirming third-quarter sales estimates and saying the company expected to break even by the second quarter of next year.
Focus On Color-Screen Sales
Analysts said they would be looking at how well Nokia's color-screen phones were selling, especially the high-end 7650 model which has a built-in camera and allows users to send multimedia messages (MMS) like sound and photos.
The success of MMS is key to a revival of the industry after it experienced its first ever decline in unit sales last year.
"I am looking for handset market share estimates in the quarter and the effect of new phones on average selling prices," said Mandatum Stockbrokers analyst Erkki Vesola.
"It's all about Nokia Mobile Phones and the new handsets and replacement demand. With Networks, the view is more blurred than before due to the uncertainty of the 3G business case," he said.
On Nokia's networks side, the focus would be on how much revenue is recognized from previous sales of third generation network sales, but the overall performance is seen to be grim due to low spending by cash-strapped carriers.
Nokia Networks is expected to post a third-quarter operating profit of only 76 million euros, halving on the year-ago period, with sales down six percent, analysts said.
The market will also be watching for Nokia's comments on fourth-quarter handset sales, which the company has been bullish about thanks to the launch of its new color screen phones for the key Christmas season. Analysts remained more skeptical.
"What I have tried to tell my clients is that the company's fourth-quarter forecasts are handset volume dependent. Nokia is looking at a very strong recovery in the market and that is not a certainty," one London-based analyst said.
"I suspect that Nokia will be encouraging a view that things are happening more quickly than is probably realistic," another London-based analyst said.
Nokia is due to give third-quarter earnings on Thursday, October 17 at 5 a.m. EDT, with a conference call at 8 a.m. EDT. <<
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