NOK ( $18-$21) Squeaks Past Q2 Forecast, Predicts Flat Q3
By Dan McDonough, Jr., Wireless.NewsFactor.com
Right in the middle of earnings season -- perhaps it should be called flu season -- Nokia (news - web sites) (NYSE: NOK - news) said it, too, is suffering from the ailments of a weak economy.
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The Helsinki, Finland-based mobile phone and networking giant said its adjusted second-quarter earnings fell to 830 million euros (US$725 million), or .17 euros per share, from 984 million euros, or .21 euros per share, in the year-ago quarter. With these numbers, the company narrowly beat analyst estimates.
The company's Q2 sales rose 5 percent to 7.3 billion euros from 7 billion euros a year ago.
At the Nokia Networks unit, sales for the quarter fell 2 percent to 1.9 billion euros from last year's levels, thanks to poor sales in Europe that were offset by growth in the Asia-Pacific region and flat revenue in the Americas.
Up Slightly
Still, Nokia said its networks business continued to outperform the market, adding that its share of the overall mobile infrastructure market rose slightly to approximately 20 percent at the end of the second quarter.
"In mobile networks, our position has developed favorably to bring us additional market share," Nokia chairman and chief executive Jorma Ollila said. "Based on our estimates, we believe we are now the world's largest GSM (global system for mobile communications) base station supplier."
Nokia's mobile phone sales rose 10 percent to 5.3 billion euros from 4.9 billion euros. Growth in this sector was strong in Europe and Asia Pacific, while sales fell in the Americas.
"In mobile phones, we launched 14 new products during the first six months of 2001 and we have a strong product line-up for the second half," Ollila said. "Plans are on track to commence deliveries of our first GPRS (general packet radio service) phone in the third quarter, and this should start to impact earnings towards the fourth quarter."
Fighting the Economy
Nokia said its slow growth in the second quarter was largely due to weaker than expected market conditions. In particular, Nokia said markets were adversely affected by operators' reduced investments in their existing networks, especially in the Americas and Europe.
The company said it anticipates little if any change in these market trends during the remainder of 2001.
In an effort to fight the weak global economy, Nokia said it has trimmed staff and boosted outsourcing. In the first half of the year, the company cut about 1,600 jobs, reducing its workforce to about 58,675 employees. It said it plans to cut another 1,500 employees before the year ends.
Rough economic conditions have Nokia guessing that the global mobile phone market in 2001 will show very little or modest volume growth compared with 2000, when about 405 million phones were sold.
Flat Growth Predictions
Nokia said it expects third-quarter revenue growth will range from flat to 5 percent. The company projected adjusted earnings per share for the third quarter will be between .14 euros and .16 euros per share. In a vague statement, Nokia said the fourth quarter "would improve on that."
In its networks business, Nokia said revenue from shipments on the many 3G (third generation) contracts it recently landed will not be reflected in its earnings results until mid-2002.
Also, the company is shifting the focus of its business to keep its balance sheet together.
"Although we continue to maintain our stated 40 percent global market share target for the long term, given the discounting by some of our competitors and the difficult market conditions, we are placing more emphasis on sustaining healthy profitability," Ollila said.
Nokia's adjusted earnings for the second quarter exclude goodwill amortization and other nonrecurring charges totaling nearly 300 million euros. |
