Nokia sees falling sales but stands by earnings outlook

  • 2002-09-12

Nokia, the world's largest maker of mobile phones, stood by a previous earnings target although it expects sales to fall short of an earlier estimate for the third quarter of the year.

Issuing a midterm update on its third-quarter performance on Sept. 10, Nokia said it expected earnings per share in a range from 0.15 euros to 0.17 euros, which was in line with earlier estimates.

However, the group warned sales would fall to between 7.1 billion to 7.4 billion euros (6.9 billion-7.2 billion dollars), compared with an earlier forecast of 7.2 billion to 7.6 billion euros.

The earnings forecast was in line with the estimates of analysts, who were also looking for sales at around 7.23 billion euros in the quarter.

In comparison to the company's third-quarter expectations, Nokia reported in the same period last year earnings per share of 0.16 euros and net sales of 7.05 billion euros.

Nokia's share price dropped 2.26 percent following the update, trading at 13.84 euros on the Helsinki stock exchange.

Analysts said they suspected that bleak comments on the Nokia's network division were to blame for the stock's fall, but they added that these should have already been factored into the share price.

"There are no real reasons for the share price to drop," a Helsinki-based telecom analyst said. "Nokia's comments on networks division were weak, but this should have not been too surprising to anybody."

Due to the sluggish demand and delays in the launch of next-generation mobile phone services, or 3G, among operators, Nokia said its network division would see its sales decline by 5 percent in the third quarter compared with the same period in 2001.

In the third quarter last year, Nokia Networks had 1.66 billion euros in sales, while its mobile phone division had a turnover of 5.27 billion.

The group would also write off 300 million euros on its network financing operations after a restructuring of debt owed by the ailing German firm MobilCom, it said.

Commenting on its handset division, the Finnish group said it was "increasingly confident" about reaching a goal of 400 million handsets sold worldwide this year, 37 percent of which would bear the Nokia name.