Noika earnings said to be on low end and Ben G. comments on Nokia's pervarications and loss of leadership qualities.
DJ Nokia's 2Q Results Unlikely To Comfort Investors >NOK
Dow Jones News Service ~ July 13, 2001 ~ 5:49 am EST
By Buster Kantrow
STOCKHOLM (Dow Jones)--Nokia Corp. (NOK), the world's largest manufacturer of mobile phones, isn't likely to
provide much comfort to beleaguered telecom investors when it reports second quarter results next week.
The Finnish telecommunications giant is expected to post earnings near the bottom end of the guidance it gave last
month, when it warned that profits would be 15% to 25% less than previously projected.
That news, coupled with the general gloom in the sector, sent Nokia's shares to a 22-month low of EUR20.28, nearly
70% below its high in mid-2000. Early Friday, buoyed in part by hopeful comments this week by rival Motorola Corp. (
MOT), shares were trading at EUR22.30.
According to a Dow Jones survey of six analysts, Nokia is expected to report second quarter earnings per share next
Thursday of EUR0.15 on sales of around EUR7.54 billion. Nokia said last month it expected to post EPS of between
EUR0.15 and EUR0.17, rather than the EUR0.20 it had previously forecast.
In the second quarter of 2000, Nokia earned EUR0.21 per share on sales of EUR6.98 billion.
At the same time, analysts expect the company to lower its sales and earnings expectations for the rest of the
year, as it continues to adjust to slowing worldwide demand for mobile phones and sluggish capital spending by
operators.
ABN Amro, for instance, projects that Nokia will cut its sales growth forecast for the full year to 10% from 20%.
As always with Nokia, the focus will be on the phone unit, which accounts for about 70% of sales, with investors keen to
see whether the company stands by its forecast for overall global handset sales this year.
Nokia trimmed its forecast when it gave a profit warning in June, saying it expected "modest growth" from 2000, when
around 405 million phones were sold worldwide. But some of Nokia's competitors, industry suppliers and analysts have
since reduced their own forecasts even further.
Observers say they believe that Nokia will report that it's continued to make progress toward its target of securing 40% of
the world market in phones. However, they say the phone unit's operating margins likely narrowed during the quarter, as
the retail price of phones fell. Nokia had a market share of around 35% in the first quarter.
Morgan Stanley said it expects margins in the unit to be around 16.7%, down from 20.7% in the first quarter.
On the systems side, analysts said that the abrupt slowdown in capital spending by U.S. and European operators that has
hurt rivals such as Telefon AB LM Ericsson (ERICY) has likely squeezed Nokia's margins as well.
Lehman Brothers said it expects Nokia to report infrastructure margins of around 10%, down from 17% in the first
quarter.
Nokia, which reported network sales growth of around 35% in the first quarter, said last month that it now expects the
unit's sales growth for the year to be merely in line with the overall market growth. It subsequently announced the
elimination of around 1,000 jobs from its networks unit, about 4% of the unit's work force.
Analysts will be watching for any indication from the company that it sees an end to the current malaise in the sector. But
Nokia's projections are likely to be treated with a degree of skepticism, given its string of retreats from prior
rosy forecasts in the past eight months, including last month's profit warning.
"Right now, the confidence in Nokia's management is at a many-year low," said Johan Brostroem, an analyst
with Hagstromer & Qviberg in Stockholm. "People, including myself, are going to be quite skeptical of their
statements."
Nokia is scheduled to release its results around 0900 GMT Thursday, July 19, with a conference call to follow at 1200
GMT.
Company Web site: nokia.com
-By Buster Kantrow, Dow Jones Newswires; +46 8 54513091; Buster.Kantrow@ dowjones.com
(END) DOW JONES NEWS 07-13-01
05:49 AM
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Analysts are not the only industry participants who are "skeptical " of Nokia's rhetoric, and whose "confidence in
Nokia's management is at a many-year low".
Blood's in the water, and the scent spreads fast.
Analysts have lost credibility by believing Nokia statements and guidance....
But carriers have lost far more in following and trusting this vendor.
Cocky - and loose with the truth - Nokia is exhausting its leadership currency and credibility. |
