RealTime IT News

Nokia Backs Off Earnings Growth Projections

The battered telecommunications sector took another body slam Tuesday with a warning from bellwether Nokia Corp. that it would miss its second-quarter sales because of a slump in demand for mobile phones and network equipment.

With all eyes on its earnings projections, the Finnish mobile phone giant backed off previous forecasts for growth in the second quarter. Instead, Nokia said sales would dip 2 percent to 6 percent below year-ago numbers. Earlier estimates had set sales growth between 2 percent and 7 percent from the previous year's second quarter.

However, despite the dwindling sales, Nokia maintained pro forma per-share earnings was on track to meet previous guidance of EUR 18 cents to 20 cents. Nokia reported an EPS of 17 cents during the second quarter of 2001.

The declining numbers which is sure to further depress stocks in the telco sector, comes as Nokia warned that sales of network equipment would likely be about 25 percent lower, compared with earlier guidance of a decrease of 5 percent to 10 percent, year on year.

The company's mobile phone sales unit, which commands a one-third share of the world market, is also expected to feel the crunch. Nokia said slowing demands for cell phone would cause unit's sales to be flat to 4 percent higher in the second quarter.

Nokia, which competes directly with Ericsson, Motorola and Siemens, however expects its market share to increase (both sequentially and year on year) to the level of 38% during the second quarter, with the company's year-on-year volume growth exceeding 10 percent.

"(We estimate) overall mobile phone market volume to grow in the second quarter by about 5 percent, compared with 89 million in the first quarter," Nokia said.