Nokia <NOK1V.HE> cuts forecasts, slump comfirmed
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HELSINKI, Jan 30 (Reuters) - Nokia on Tuesday cut its forecasts for this year, confirming fears that the world's most successful mobile phone maker is also sinking into a sector slowdown.
The Finnish giant -- once seen as largely immune to troubles affecting rivals Motorola of the United States and Sweden's Ericsson -- predicted earnings per share for the first quarter of 2001 would remain flat on the same quarter of last year at 0.19 euros.
It said handset operating margins would reach 20 percent at the latest in the fourth quarter of 2001, seen as a downgrade by many analysts. Nokia's handset margins traditionally sit above 20 percent.
Nokia's share was down 8.7 percent at 36.65 euros by 1206 GMT, off its low of 32.70 euros touched in October last year.
Pre-tax profit for the fourth quarter of 2000 rose 39 percent year-on-year to 1.77 billion euros ($1.62 billion), slightly above the median forecast in a Reuters poll of 1.70 billion.
But the group, hit by slowing global mobile phone sales and subscription demand, forecast weaker-than-expected Q1 sales growth of around 25-30 percent.
The news helped pull down rivals and the Dow Jones Technology index some three percent at midday trade.
"The result was in line with expectations, it's getting tougher in the market place," fund manager Jamie Sandison, Edinburgh Fund Management, which holds Nokia and Ericsson stock, told Reuters.
INDUSTRY FORECAST ALSO CUT
As expected Nokia, the world's biggest and most profitable mobile phone maker, cut its forecast for 2001 industry-wide mobile phone sales to 500-550 million units from a previous 550 million.
Main rival Motorola recently reduced its 2001 industry estimate and Sweden's Ericsson last week pulled out of mobile phone manufacturing to stem losses in that division.
Analysts fear it may take longer for customers to warm to high-speed mobile Internet GPRS or even faster, new generation mobile phones, which operators and cellphone makers had hoped would be big sellers in coming years.
Nokia posted an operating margin of 21.3 percent for its mobile phones in Q4 below its fourth quarter of 1999 but considerably higher than the 2.1 percent Motorola reported for its division in the fourth quarter and the negative 74 percent at Ericsson's loss-making cellphones unit.
But Nokia's margin for the division was lower than some had expected in the industry, confirming tougher market conditions.
"It's a profit warning for the first quarter of this year with margins falling in mobile phones," said Fischer Partners' Hakan Vramme in Stockholm.
Fourth-quarter net sales showed a better-than-expected jump of 46 percent to 9.28 billion euros versus 8.93 billion in the poll.
Nokia reiterated it saw first-half 2001 sales growth in the upper range of 25-35 percent and repeated forecasts for full-year 2001 through 2003 of sales growth of 25-35 percent, with continued high profitability.
The company's board will ask shareholders to endorse a stock options scheme of 145 million shares for staff and to approve a buy-back of up to 225 million shares.
GPRS PUSHED BACK
Nokia also pushed back the launch of its high-speed GPRS mobile phone -- which will give "always on" Internet access -- to the third quarter of this year from the first half, also confirming industry worries that the success of GPRS will take longer than earlier expected.
The launch of phones from Nokia -- which gets 70 percent of total sales from its mobile phones division -- is key for the success of GPRS because of its market leadership position.
Nokia had a 32 percent global market share last year and sold 128.4 million phones.
Delaying GPRS phone launches could make it tougher for handset manufacturers to post high profits as they need new phones with new technologies to temp handset users to upgrade their existing phones.
Any delay in the launch of GPRS phones could also hit mobile phone operators who have poured billions of euros into costly third-generation (3G) licences and networks.
Nokia, the second largest maker of mobile network equipment after Ericsson, said it expected is operating margin percentage for the division to be in the high teens in 2001, similar to earlier forecasts.
08:08 01-30-01 |
