|
Sonera profit disappoints
|
 |
January 18, 2001: 7:16 a.m. ET
Finnish telecom firm's shares tumble as profits fall by a quarter
|
LONDON (CNNfn) - Sonera shares sank 12 percent Thursday after the Finnish telecom firm rushed out a report showing core profits tumbled 23 percent in 2000.
Finland's largest telecom firm said profits fell so sharply because it had racked up extra costs in rolling out new services such mobile and Internet portals.
In Helsinki trading Thursday, Sonera shares slid as low as  20.50 before recovering slightly to stand 8.8 lower percent at 21.35.
Shares of Sonera (SNRA: Research, Estimates), whose American depositary receipts trade on the Nasdaq market, are down 76 percent since hitting a high of 97 last March.
The preliminary report, released unexpectedly early, showed earnings before interest, taxes, depreciation and amortization – EBITDA is a measure of underlying profitability – fell to 500 million in 2000, from 647 million a year earlier.
Sonera said it spent an extra 240 million on new services in 2000, with 45 percent of that going toward mobile portal Zed, and 25 percent being spent on Internet portal SmartTrust.
Sonera admitted that the recent pummelling of telecom share prices had forced it to unveil its earnings as speedily as possible:
"The market has been nervous about the telecom sector," Kim Ignatius, Sonera's chief financial officer, told CNNfn.com. "We thought that as soon as we had the results, we would bring them out so there would be less insecurity about the level (of profits)."
Analyst Paavo Ahonen at brokerage Aktia told Reuters:
"Investments in Zed and SmartTrust have been bigger than what I expected, and that is why the result is lower than my own forecasts."
Ted Roberts, an analyst with Goldman Sachs in London who has an "outperform" rating on Sonera, said the figures were slightly below Goldman's estimate for 504 million. But he said "many brokerages in the Nordic region had higher estimates."
Revenues rose 11 percent to 2.05 billion, in line with what Roberts had anticipated. Sonera expects to issue its complete 2000 report on Feb. 12. 
Ignatius said the telecom company is optimistic about tits prospects for the coming year:
"The service business is important for our profitability ... and it's developing according to our plans."
Ignatius declined to comment on recent speculation regarding potential partners that Sonera has been looking for, and he would not say whether there was a timetable for a deal.
In August, Sonera Deputy Chief Executive Kaj-Erik Relander said at least six prospective partners were interested in an alliance with the Finnish firm. At that time, Relander told Reuters hopes for a deal by the end of 2000 was a "realistic timetable."
Sonera is majority owned by the Finnish government.
The company said profit before extraordinary items and taxes, excluding gains and losses from the sale of investments, was about 310 million, down from 476 million a year earlier. Goldman Sachs had expected that to come in at 329 million.
Sonera said both its mobile communications and fixed-line businesses grew strongly, with the number of mobile subscribers up 17 percent across the year at 2.28 million. 
|
|
|
|
|
|
Sonera
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
