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To: Robin Plunder who wrote (116940)	4/20/2002 10:34:17 PM
From: John A. Stoops	Read Replies (1) \| Respond to of 152472

Nokia, Motorola May Have to Get Used to Growing Like Utilities By Holly M. Sanders New York, April 20 (Bloomberg) -- Nokia Oyj, Motorola Inc. and rival mobile-telephone makers, after a 1990s romp when annual profits sometimes rose 50 percent or more, may have to get used to growth rates reminiscent of utilities, analysts said. While companies are betting new services and expansion into less-developed markets will rekindle sales, forecasts earlier this week from the world's largest mobile-phone makers caused some analysts and investors to doubt the industry's growth prospects. Nokia, the biggest mobile-phone maker, said 2002 sales may rise as little as 4 percent, below an earlier forecast of 15 percent. Rival Motorola said second-quarter sales will be as much as $6.4 billion, down from $7.52 billion a year earlier. First- quarter sales fell to $6.02 billion, the lowest in seven years. The company will have a second-quarter loss, its sixth straight. ``They're going to have to get used to slower growth,'' said Jim Moore, an analyst with State Street Research and Management who doesn't own either stock. ``Most everyone who can afford a wireless phone has one. You're going to see fewer sales of handsets and those that are sold will be replacements.'' Sales of handsets declined for the first time in 2001 after compound annual growth of almost 60 percent in the previous four years, according to Dataquest Inc., a unit of market-research firm Gartner Inc. Handset sales fell 3.2 percent from 412.7 million phones to 399.6 million in 2001, according to Dataquest. Handset Replacements Finland-based Nokia's shares fell 66 cents to $17.44 in U.S. trading yesterday. They have fallen 45 percent in the past year. Shares of Schaumburg, Illinois-based Motorola rose 1 cent to $15.61. Analysts say consumers will replace their handsets at a slower rate until companies give them a reason to upgrade their phones. Mobile-phone makers are counting on color screens and the arrival later this year of multimedia messaging -- a feature that will allow users to swap pictures -- to revive sales. Nokia plans to introduce the color-screen 7210 model that supports multimedia messaging. Motorola is seeking to attract more fashion-conscious consumers with its new model, the silver V70, which features a rotating cover instead of one that flips. Slower Growth Even so, consumers may not replace their handsets as often as in the past. Nokia's chief executive officer, Jorma Ollila, said in a call with investors Thursday that consumers in Europe and Asia likely will replace their handsets at a slower rate than the company had expected. ``This will be a different industry going forward,'' said Jeffrey Schlesinger, an analyst at UBS Warburg LLC who doesn't own shares of either company. ``We will see some periods of strong growth as we enter new product cycles. Growth will certainly be slower, cyclical and more variable.'' Mobile-phone makers are looking to consumers in China and India to counter slowing sales in more established markets. Still, many consumers in newer markets either can't afford service or live in areas where it isn't available, analysts said. Those that can pay for service probably already have a phone, they said. ``I think it's maturing a little sooner than people had thought,'' State Street Research's Moore said of the wireless industry. ``We've pretty much figured out all the nooks and crannies.''