|
Nokia 2Q profit soars 61%
|
 |
July 22, 1999: 8:35 a.m. ET
Strong earnings increase pressure on troubled rival Ericsson
|
LONDON (CNNfn) - Nokia's second-quarter profit surged nearly two-thirds higher, but the Finnish cellular equipment maker's stock price drooped Thursday.
Initial disappointment at the 61 percent rise in second-quarter pretax profit to 877 million euros ($918 million) sent the stock tumbling 7 percent immediately after the announcement. However, the shares soon retraced most of their losses as bargain hunters stepped in, cutting the loss to 4 percent at 84.89 euros.
The range of forecasts for the earnings number stretched from 770 million euros to 1.04 billion euros, with a consensus of 860 million euros, Reuters reported.
The company's overall performance has been accompanied by a surging stock price, and Nokia shares have soared from 55.63 euros at the beginning of 1999. In mid 1997 they were trading at the equivalent of just 15 euros -- the euro only came into existence this past Jan. 1.
Revenue in the quarter rose 45 percent to 4.493 billion euros.
Jorma Ollila, chairman and chief executive, said in a statement he was confident "to reach or slightly exceed the high-end of our 1999 net sales growth target of 25-35 percent."
Despite the bout of profit-taking affecting the share price, analysts were upbeat about the company's prospects.
"Profits were better than our forecasts in every area," said Anita Farrell of Merrill Lynch. Prior to the latest announcement she had predicted a full-year pretax profit of 3.41 billion euros, a 40 percent rise on the previous year's figure. Farrell has an "accumulate" rating on Nokia stock.
Nokia estimated that some 375 million cellular handsets existed at the end of June.
Tough reading for Ericsson
The stunning numbers will make tough reading for executives at Ericsson, Nokia's Swedish rival.
Ericsson reports second-quarter numbers Friday, and analysts are predicting a much less rosy picture. The company has issued several profit warnings on the past year.
The slow pace of a painful fundamental restructuring at Ericsson came to a head earlier this month, following the ouster of chief executive Sven-Chrster Nilsson. He lost his job for not pushing through reforms fast enough.
|
|
|
|
|
|
Nokia
Ericsson
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
