Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Qualcomm Moderated Thread - please read rules before posting -- Ignore unavailable to you. Want to Upgrade?

To: foundation who wrote (23944)	6/20/2002 8:10:55 AM
From: foundation	Read Replies (1) \| Respond to of 197032

DJ THE SKEPTIC: Nokia's Exceptional Earnings.... Dow Jones News Service ~ June 20, 2002 ~ 7:27 am EST By Brian Truscott LONDON (Dow Jones)--It would be rather exceptional these days if Nokia (NOK) didn't make its full-year earnings forecasts without slipping in a few exceptional items. The world's leading mobile phone maker is starting to sound a lot like a doctor who first tells a patient he has a little cold before letting slip that the poor guy has pneumonia. Talk about easing the market into a wicked case of bad news. Nokia said Thursday that year-on-year sales in the second half of the year will reflect growth of up to 10% - not 15%, as previously stated. This latest admission comes a week after the Finnish giant reduced sales expectations for the second quarter and two months after reducing full-year sales estimates and its global handset target. At the same time, Nokia said it still remains comfortable with previous guidance for 2002 pro forma earnings per share of EUR0.83. Of course it does, because Nokia is masterful when it comes to the use of pro forma profit and loss accounts - an accounting standard that excludes items that management considers one-time occurrences This begs the question: If you have exceptional items each and every quarter, should they actually be called exceptional? Nokia's tendency to use pro forma results as a crutch is well documented. More often than not, contracts with clients that went sour, and amortized goodwill, are usually written off, which tends to inflate figures on the balance sheet. The problem? Well, in past quarters, such "one-off items" battered operating profit, but investors have to search deep into an earnings statement to see the damage. Now, you could say that Nokia has bitten the bullet and given new guidance to investors. However, the market appears divided on whether the guidance is too conservative or too bullish. Either way, the forecast still leaves Nokia room for further "alterations" down the road. But, truth be told, investors will have to tread cautiously when the next set of Nokia results are released. There is a certain amount of event risk in waiting for management to decide an asset should be marked to market or how a major contract default is accounted for. Nokia's management will continue to try and paint a bright earnings picture. Seeing past the window dressing remains the biggest challenge for investors.