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Technology Stocks : Nokia (NOK) -- Ignore unavailable to you. Want to Upgrade?

To: 49thMIMOMander who wrote (13984)	7/19/2001 6:54:02 PM
From: Ruffian	Read Replies (1) \| Respond to of 34857

Guess even Nok Does it! HELSINKI, July 19 (Reuters) - Nokia (NOK1V.HEL) on Thursday defended its earnings reporting style as the most accurate possible in spite of large discrepancies between its pro forma and International Accounting Standards (IAS) second quarter figures. The telecoms equipment maker at the start of 2001 began reporting pro forma figures, which excluded goodwill charges from acquisitions, changes in the company's structure due to acquisitions or divestments and other non-recurring items. At the time, Nokia said the move would "increase transparency and provide more meaningful information to investors", and spokeswoman Maija Tommila told Reuters the method gave a better view of the company's current state. "It tells the real situation in the ongoing business and helps people see the future better," she said, adding that for the time being the company would continue to give both pro forma and IAS figures in its results. While excluding items from accounts through so-called special charges is not against accounting rules, it has drawn scorn from some financial market regulators as more companies have resorted to it in the worsening global economic conditions. Some critics say that pro forma accounts can be misleading to investors by accentuating the positive and minimising the negative in a company's performance. In Nokia's case, the discrepancy in the pro forma and IAS figures for its two main divisions -- Nokia Mobile Phones and Nokia Networks -- is considerable. The Finnish company earlier on Thursday reported second quarter pre-tax profits falling 20 percent year-on-year to 1.17 billion euros ($1.02 billion), slightly above the median forecast of 1.09 billion in a Reuters poll of analysts. But if its International Accounting Standards (IAS) figures are used, the fall in pre-tax profits in the second quarter was far steeper -- 38 percent year-on-year to only 885 million euros due to one-off restructuring charges and goodwill write-downs. Using IAS figures, the operating profit for its key mobile phones unit fell 26 percent to 902 million euros against a pro forma fall of 21 percent to 960 million. The discrepancy is even larger in Nokia Networks. By IAS standards, the division had a fall in operating profits of 31 percent to 240 million euros instead of a decline of 16 percent to 300 million in the pro forma accounts. Networks' pro forma operating profit is 25 percent greater than its IAS operating profit, and the total group pro forma operating profit of almost 1.14 million euros is 33 percent above the IAS figure of 856 million. Analysts said that while Nokia was not alone in the move to remove "unusual" charges from balance sheets, as market conditions and the global economy worsen, they felt the use of pro forma figures was not telling the whole story. "The difference between the two sets of figures is quite significant, and I think that the IAS figures are more accurate," said a Helsinki-based analyst, speaking on condition of anonymity. "This is a trend in the industry and Nokia is not alone, said a London-based analyst. "They are taking charges for building up extra capacity in abnormally tough conditions, but on the other hand, years ago when things were abnormally good why were the gains not factored out?" ((Helsinki newsroom +358-9-680 50 248, fax +358-9-680 2284, helsinki.newsroom@reuters.com)) ($1=1.144 Euro) europeaninvestor.com\|LG=EN\|NID=3795445,00.html