Nokia shares surge despite steep fall in profits
HELSINKI (AP) -- Nokia shares soared nearly 10 percent Thursday despite a plunge in first-quarter profits as the cellular powerhouse maintained its market outlook and sold more mobile phones than analysts had expected.
The world's top mobile phone maker said net profit was only euro122 million ($161 million), compared to euro1.2 billion in the same period last year.
Sales fell 27 percent to euro9.3 billion ($12.2 billion), from euro12.7 billion in the first quarter of 2008.
Both figures came in below expectations but investors were relieved that Nokia stuck to its projections for the global mobile phone market and its target of boosting market share this year. Also, sales volumes didn't drop as much as analysts had predicted, reinforcing the sense that the market has bottomed out, said FIM Bank analyst Michael Schroeder.
"That's the impression we got from Nokia," he said. "There's also been a general assumption in recent weeks that there are certain lights now in selective markets."
Nokia shares closed up 9.4 percent at euro11.08 ($14.62) on the Helsinki Stock Exchange.
Nokia Corp. has fared better than many of its smaller rivals in the economic slowdown. But it, too, has been hit by falling demand. Last month it announced 1,700 layoffs worldwide.
An additional 1,000 employees had taken advantage of a voluntary pension program as the company seeks to slash costs, the Finnish company said Thursday.
"The global economy as a whole remains weak and we are planning our business accordingly," chief executive Olli-Pekka Kallasvuo said in a conference call. "I believe the current environment favors Nokia. Our position of strength allows us to maintain our strategic objectives."
Chief Financial Officer Rick Simonson added that the company would continue to cut operating costs. "We have a realistic view of the macroeconomic downturn and we do not expect a quick or strong recovery," Simonson said.
Nokia sold 93 million mobile phones in the first three months of 2009, down 19 percent from 115 million in the year-ago quarter. Still, that was more than the 90 million-92 million forecast by analysts, said Neil Mawston from Strategy Analytics in London.
"Although their performance was bad, it wasn't as bad as expected," Mawston said. "Everyone talked Nokia down, so there was a general relief that things weren't that bad after all."
Nokia said it expects mobile device volumes to remain steady or grow slightly in the second quarter.
It maintained its previous estimate that the mobile device market would shrink by 10 percent this year and held on to its target of boosting market share. However, it downgraded its outlook for the network infrastructure market, saying it expects a 10 percent contraction in 2009. Nokia, which has a joint network unit with Siemens AG of Germany, had earlier predicted that market would decline 5 percent this year.
For mobile devices, Nokia's market share was 37 percent, unchanged from the previous quarter but down 2 percentage points from the first quarter of 2008. Meanwhile, the average selling price of Nokia phones dropped to euro65 ($86) from euro71 in the previous quarter and euro79 in the first quarter of 2008.
Kallasvuo said he was especially pleased with the performance of the Nokia 5800, a touch-screen music phone that rivals Apple's iPhone.
"We estimate that we captured approximately 20 percent of the overall touch-screen device volumes with just one product. Clearly we are just getting started," Kallasvuo said.
One of Nokia's main competitors, Sony Ericsson, was to present its first-quarter report on Friday.
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The world's top mobile phone maker said net profit was only euro122 million ($161 million), compared to euro1.2 billion in the same period last year.
Sales fell 27 percent to euro9.3 billion ($12.2 billion), from euro12.7 billion in the first quarter of 2008.
Both figures came in below expectations but investors were relieved that Nokia stuck to its projections for the global mobile phone market and its target of boosting market share this year. Also, sales volumes didn't drop as much as analysts had predicted, reinforcing the sense that the market has bottomed out, said FIM Bank analyst Michael Schroeder.
"That's the impression we got from Nokia," he said. "There's also been a general assumption in recent weeks that there are certain lights now in selective markets."
Nokia shares closed up 9.4 percent at euro11.08 ($14.62) on the Helsinki Stock Exchange.
Nokia Corp. has fared better than many of its smaller rivals in the economic slowdown. But it, too, has been hit by falling demand. Last month it announced 1,700 layoffs worldwide.
An additional 1,000 employees had taken advantage of a voluntary pension program as the company seeks to slash costs, the Finnish company said Thursday.
"The global economy as a whole remains weak and we are planning our business accordingly," chief executive Olli-Pekka Kallasvuo said in a conference call. "I believe the current environment favors Nokia. Our position of strength allows us to maintain our strategic objectives."
Chief Financial Officer Rick Simonson added that the company would continue to cut operating costs. "We have a realistic view of the macroeconomic downturn and we do not expect a quick or strong recovery," Simonson said.
Nokia sold 93 million mobile phones in the first three months of 2009, down 19 percent from 115 million in the year-ago quarter. Still, that was more than the 90 million-92 million forecast by analysts, said Neil Mawston from Strategy Analytics in London.
"Although their performance was bad, it wasn't as bad as expected," Mawston said. "Everyone talked Nokia down, so there was a general relief that things weren't that bad after all."
Nokia said it expects mobile device volumes to remain steady or grow slightly in the second quarter.
It maintained its previous estimate that the mobile device market would shrink by 10 percent this year and held on to its target of boosting market share. However, it downgraded its outlook for the network infrastructure market, saying it expects a 10 percent contraction in 2009. Nokia, which has a joint network unit with Siemens AG of Germany, had earlier predicted that market would decline 5 percent this year.
For mobile devices, Nokia's market share was 37 percent, unchanged from the previous quarter but down 2 percentage points from the first quarter of 2008. Meanwhile, the average selling price of Nokia phones dropped to euro65 ($86) from euro71 in the previous quarter and euro79 in the first quarter of 2008.
Kallasvuo said he was especially pleased with the performance of the Nokia 5800, a touch-screen music phone that rivals Apple's iPhone.
"We estimate that we captured approximately 20 percent of the overall touch-screen device volumes with just one product. Clearly we are just getting started," Kallasvuo said.
One of Nokia's main competitors, Sony Ericsson, was to present its first-quarter report on Friday.
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