0t-- Nokia Profits Double, Ericsson's Halves
HELSINKI, Finland (Reuters) - Nokia, the world's largest mobile phone maker, said Thursday its
first-quarter profits almost doubled, but Swedish rival Ericsson posted a stunning 51 percent plunge in
profits amid increased competition.
Nokia, based in Helsinki, Finland, reported a 96 percent jump in first-quarter profits to 758 million euros
($802.6 million). This was 21 percent above analysts' consensus estimate of 624 million. In the past two years, Nokia has
frequently exceeded analysts' estimates in its results.
Ericsson, the world's third-largest mobile phone maker, said its pretax profits fell to 1.3 billion Swedish crowns ($154.5 million)
from 2.64 billion ($313.7 million) in the year-ago first quarter, far below expectations of 1.86 billion crowns ($221 million).
Sales rose 8 percent to 41.57 billion crowns ($4.9 billion).
''Nokia has the Midas touch in mobile phones right now, they are mining gold. Analysts will have to substantially raise earnings
forecasts for this year ... by 10 to 20 percent,'' said Lauri Rosendahl, analyst at Aros Securities in Helsinki.
Nokia said the first quarter -- with strong sales growth in all regions -- made it confident of reaching its sales growth target of
25-35 percent in 1999.
''The growth of our mobile phone sales volumes exceeded market growth worldwide and we further solidified our position as
the world's leading mobile phone supplier,'' it said in its first-quarter report.
Analysts said they would have to raise their estimates for results of the company, which has soared to become Europe's
sixth-biggest company by market capitalization in the 1990s.
The consensus forecast in a Reuters poll for Nokia's 1999 pretax profit is 3.08 billion euros ($3.3 billion) and the consensus for
2000 is 3.66 billion euros ($3.9 billion).
By contrast, Ericsson's forecast that 1999 profits would not match the 1998 level.
Sven-Christer Nilsson, who became chief executive last March, said Ericsson was facing financial uncertainty in several
markets, increased research and development costs, lower profitability for some products, and restructuring costs.
''This means that, in spite of a stronger second half of 1999, income per share for the year is expected to be lower than in
1998,'' Nilsson said in a statement.
Ericsson has unveiled a new platform of high-tech mobile phones to be launched through the year but they are not expected to
have a significant effect until the second half of the year.
Ericsson's recent acquisitions of U.S. companies will not affect results yet. It paid almost $500 million in cash for U.S.
Internet-based data communications companies Torrent Networking Technologies and TouchWave Inc. earlier this month.
These are expected to reduce profits this year.
The world's No. 2 mobile phone maker is Motorola Inc. (NYSE:MOT - news) of Schaumburg, Ill.
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