Nokia Cuts Profit Margin Target, Citing Siemens Network Merger
By Juho Erkheikki
Nov. 28 (Bloomberg) -- Nokia Oyj, the world's largest maker of mobile phones, lowered its profitability targets because of ``increase exposure'' to the wireless network market as it combines the unit with Germany's Siemens AG.
Nokia forecast an operating margin, or operating profit as a percentage of sales, of 15 percent in one to two years, down from an earlier prediction of 17 percent, the Espoo, Finland-based company said in a statement today. Nokia is holding a meeting with analysts and investors in Amsterdam today.
The company said the margin reduction is ``primarily due to Nokia's increased exposure to the infrastructure market following the expected start of operations of Nokia Siemens Networks.''
Nokia and Siemens AG on Nov. 13 won European Union antitrust approval to combine their telecommunications network-equipment units. The merger will create an entity equally owned by the companies and with annual sales of about 15.8 billion euros ($20.8 billion) when completed by the start of 2007. The venture, which will be headed from Espoo, aims to narrow the gap to Ericsson AB in the $65 billion market for phone switches, routers and base stations.
Shares of Nokia fell as much as 37 cents, or 2.4 percent, to 15.15 euros, and traded at 15.32 euros as of 1:43 p.m. in Helsinki. |
