MM,
<< NOK warns >>
10%. Ouch! Thanks.
Infineon & STM were good indicators this might happen.
Not good for the sector.
>> Nokia Sees Slower Market Growth Affecting Second Quarter Results And Takes Actions To Expand Leadership While Maintaining Strong Profitability
Jun 12, 2001
M2 PRESSWIRE via COMTEX
During the first half of this year, Nokia has continued to perform strongly in the global mobile communications market and has been able to strengthen its leading market position. However, the general economic slowdown in the US has recently shown signs of extending to other regions and to the wireless telecommunications industry as a whole.
"We have been able to successfully follow our set strategy of increasing market share in phones and heading for the leadership position in third generation mobile networks," says Jorma Ollila, Chairman and CEO of Nokia. "However, we have recently seen a weakening in market conditions to levels below our earlier estimates.
We believe that this slowdown is a result of a general market deterioration - driven by economic uncertainty, the ongoing technology transition and less aggressive marketing by the operators.'
Nokia now estimates the global mobile phone market to show only very modest growth this year compared to 2000, when about 405 million phones were sold. During the second half of 2001, the company estimates that the market will be significantly larger than during the first half. The slower growth is expected to affect capacity-driven network investments of some operators for the time being. While it will also lead to slower-than-anticipated growth in Nokia's sales, the company believes that its mobile phone business will continue to grow significantly faster than the market during 2001, and that its network business will achieve an annual growth rate at least on par with overall market growth.
Nokia also expects weaker market conditions to impact its financial performance during the second quarter. Based on the first two months of the current quarter, the company estimates year-on-year sales growth for the second quarter 2001 to be somewhat below 10% compared with its earlier estimate of 20%. Diluted pro forma EPS is estimated to be in the range of EUR 0.15-0.17 in the second quarter 2001, compared with the previous estimate of approximately EUR 0.20. In the second quarter 2000, Nokia's diluted pro forma EPS was EUR 0.21.
Backed by the company's ongoing excellent working capital management and healthy profitability, Nokia expects to continue to see strong positive cash flow in the second quarter.
Nokia is currently revisiting its outlook for the second half of the year, as the market slowdown is expected to continue having an adverse effect. Updated estimates for the second half of 2001 will be released on July 19 in conjunction with the company's second quarter earnings release.
Nokia will continue to take determined actions in all areas of the business to align its operations with the changing market conditions.
Previously announced moves to increase the company's efficiency and competitiveness include operational changes to further enhance customer focus in Nokia Networks, a refocus of production at Nokia Mobile Phones factories in Texas (US) and Bochum (Germany), and the re-alignment of Nokia Internet Communications. The financial impact of these actions will negatively affect Nokia's reported operating profit in the second quarter 2001 in the form of a one-time charge of approximately EUR 190 million, which will include restructuring charges, as well as goodwill write-offs at Nokia Internet Communications.
"While market deterioration has had an inevitable impact on Nokia's sales growth, our products have remained strong, our market position has strengthened and we've been able to find further efficiencies through tight control of our own performance. As a result, Nokia has been able to maintain a high level of profitability,' says Jorma Ollila.
"We have intensified our efforts to counter changing market conditions by accelerating ongoing programs and generating efficiencies and cost savings. This, in combination with our current financial health and proven performance, should enable us to exit the current slowdown in a stronger position than before. We will, together with our operator customers, continue the implementation of the new technologies with full speed in order to support the transition into next generation services." <<
- Eric - |
