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.
