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To: Johnny Canuck who wrote (39719)	6/10/2003 11:33:12 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 69962

Nokia: SARS, economy will hurt sales By Reuters June 10, 2003, 6:45 AM PT Mobile phone-making giant Nokia said Tuesday that, although its handset sales have been hit by a weak dollar, a sluggish economy and the deadly severe acute respiratory syndrome virus, it would stick to its previous earnings forecast. Nokia said it saw April-to-June sales growth at its money-spinning mobile phone unit at the low end of or below an earlier forecast of 4 percent to 12 percent, but still positive. "Sales reflect the continued general economic weakness in Europe and the U.S., the impact of currency fluctuations, and the effect of SARS on consumer behavior, especially in China," Nokia said in a statement. The comments come one day after the world's No. 2 mobile phone maker, Motorola, warned that it would miss second-quarter and 2003 sales and profit targets after ailing Asian markets were hit by SARS. Fear of contracting the virus kept people away from shops and other crowded places, leading to a major decline in consumer spending. Analysts said that, with Motorola already setting the backdrop, Nokia's statement contained few surprises. The Finnish company receives less than 10 percent of its sales from China, while Motorola is more dependent on the world's largest handset market. "Nokia's figures are largely unremarkable," said Simon Hallet, fund manager at ING Barings in London. "They are slightly cautious on revenues, but that was expected, given SARS and the environment, so this is not particularly concerning." Market share on the rise "Nokia is providing some relief," said Rob van Oostveen, an analyst at ABN Amro Asset Management. "After Motorola, investors were concerned that Nokia would disappoint, and although Nokia can't shrug off the dollar and China, it's managing the effects well," he said. The company said strong profitability at Nokia Mobile Phones, which generates about 80 percent of the company's sales and all of its profits, would continue, with its market share up on the 38 percent it reported in the January-to-March period. Independent market research groups estimate that Nokia's global market share was about 35 percent in the first quarter. Nokia's ability to take advantage of economies of scale--by pricing its power with suppliers and keeping tight logistics--has given the company the best handset profit margins in the business, hitting 24 percent in the first quarter. The company said it would take a restructuring charge of about $410 million to $468.6 million (350 million to 400 million euros) at its networks unit as it grapples with the drop-off in spending by telecom operator clients. But the company said that, minus the charge, the division would be close to break-even, with April-to-June sales expected to be up to 5 percent lower, surprising some analysts. There "was a nice surprise from the networks division--we had expected sales to be down 5 percent in the second quarter," said WestLB Panmure analyst Thomas Langer. "This has helped them maintain their guidance range for EPS (earnings per share) in the second quarter." Nokia did not comment on the outlook beyond the quarter, but will hold a conference call with analysts on Tuesday. The company will provide a midyear plan update on Wednesday.