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To: quidditch who wrote (28151)	4/22/1999 11:48:00 PM
From: Jon Koplik	Read Replies (1) \| Respond to of 152472

WSJ article on ERICY and NOK earnings. April 22, 1999 Mirror Images: Nokia, Ericsson Deal Separate Earnings Surprises An INTERACTIVE JOURNAL News Roundup Finnish telecom-equipment manufacturer Nokia Corp. Thursday posted a startling 96% increase in first-quarter pretax profit, sharply above analysts' estimates, on booming sales of mobile phones. Meanwhile, Nokia's rival Swedish telecommunications giant Telefon AB LM Ericsson reported first-quarter pretax profit that was just half the year-earlier total and 30% below estimates. Nokia had been expected to post stellar results, and analysts said Nokia's position as the world's largest mobile handset maker will be bolstered this year with new products. Still, others fear that Nokia's stock is overvalued. Eriscsson's shares traded lower in Stockholm, and were expected to continue to fall. But few expect the results to deal a major blow to Ericsson's stock, which has already been beaten up in recent months. Ericsson reported a pretax profit of 1.3 billion kronor ($154.7 million) for the quarter compared to 2.64 billion kronor for the same period of 1998. Analysts had expected Ericsson's pretax profit to come in around 1.85 billion kronor. Net profit for the quarter was 905 million kronor, compared to 1.81 billion kronor in the year ago period. However, revenue for the quarter increased 7.7% to 41.57 billion kronor, on the strength of a 20% increase in growth in the company's networking business, particularly in the area of mobile systems. The company cited lower margins, especially for consumer products, and higher research and development spending as the reasons for the disappointing performance. Earnings were further reduced by a 400 million kronor restructuring charge and a 70 million kronor provision for risks in connection with customer financing. The company said it is now facing financial uncertainty in a number of markets, increased costs for research and development, acquisitions, the millennium issue and information technology support, as well as lower profitability for some products along with extraordinary charges for restructuring. This means that, in spite of a stronger second half of 1999, earnings per share for the full year are expected to be lower than in 1998, the company said. In Stockholm, Ericsson's shares were down 5% and traders said further losses were likely. The company has American depositary receipts traded on the Nasdaq Stock Market. Meanwhile in Helsinki, Nokia reported first-quarter pretax profit of 758 million euros ($804 million), nearly double the year-earlier 387 million euros, while net sales grew 55% to 3.87 billion euros. The results were sharply above analyst predictions. Analysts on average had expected Nokia to deliver pretax profit of 622 million euros, according to Swedish forecasting firm SIX Market Estimates. Net income was 505 million euros, compared to 336 million euros a year ago. Revenue for the quarter was 3.87 billion euros compared to 2.5 billion euros. Sales in mobile phones increased 92.5% to 2.58 billion euros from 1.34 billion euros in the year-ago period. Jorma Ollila, Nokia's president and chief executive, said the first-quarter results strengthened the company's belief that it will reach its sales and profit targets for this year. "Our overall performance in the first quarter gives us confidence in reaching our previously stated targets for 1999," Mr. Ollila said. The company has previously said it expects sales and profit growth of 25%-35% this year. Nokia has said earlier it is planning to make further acquisitions in the Internet and wireless communications sector to boost its market position. Nokia's American depositary shares trade on the New York Stock Exchange. Analysts have said movements in the two companies share price will depend less on the first-quarter performance than on hints of what the future will bring. "Nokia and Ericsson are each other's mirror image," said Gunnar Andersson, telecom analyst at Svenska Handelsbanken in Stockholm, speaking before Thursday's results were announced. "Ericsson is taking the final blow of the tough year it left behind and is gearing up for better times; and Nokia is still gaining after an excellent year, but its stock price has suffered some." Copyright © 1999 Dow Jones & Company, Inc. All Rights Reserved.