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Nokia offers sector hope
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January 24, 2002: 9:55 a.m. ET
Finnish mobile phone giant beats earnings forecast, sees sales pick up by year end.
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LONDON (CNN) - Nokia, the world's biggest mobile phone maker, on Thursday posted better than expected fourth-quarter earnings and said sales would improve this year.
The Finnish company said net income fell 63 percent as telecom operators slashed spending and consumers held off purchasing new handsets.
Net income, including one-time expenses, for the three months to December 31 declined to  450 million ($395 million), or 0.09 a share, from 1.2 billion, or 0.25 a share in the year ago period. Sales dipped 5 percent to 8.8 billion.
Earnings, excluding charges, fell just 5 percent to 1.15 billion, or 0.24 a share, the company said. That number comfortably beat Nokia's predicted earnings per share range of between 0.18 and 0.20 ($0.16 and $0.18).
It now expects first quarter earnings per share of 0.15 to 0.17, down from 0.22 in the same period a year ago.
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Nokia CEO Jorma Ollila discusses fourth-quarter results and the company's activities in China.
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Per Lindberg, an analyst at Dresdner Kleinwort Wasserstein, told CNN that investors were ignoring the decline in the net income figure because that included "non-recurring" items and were looking to growth.
Nokia's shares, which have risen about 70 percent since September, soared 11 percent to 27.22 in afternoon trading in Helsinki. Nokia (NOK: up $1.49 to $23.70, Research, Estimates) rose 7.6 percent in early New York trading.
Mobile phone sales were unchanged at 6.7 billion, while sales of Nokia networks plunged 15 percent to 1.8 billion from 2.4 billion a year earlier.
Mobile-phone makers have been hit hard by an economic slowdown and recession in many economies, such as Japan, Germany and the U.S. At the same time many telecom operators have canceled orders for new infrastructure, choosing to control costs and cut debt.
Meanwhile, consumers have delayed purchases of new phones while they await more attractive services that give quick access to the Internet.
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Nokia sees market conditions improving during 2002. Both the company's infrastructure and mobile phone businesses are expected to show full-year sales growth of 15 percent.
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Nokia predicted first-quarter sales will be 6 to 10 percent lower than the same period in 2001. However, it said sales should pick up during the year and grow by 25 to 35 percent by the fourth quarter.
"Nokia sees market conditions improving during 2002," the company said. "Both the company's infrastructure and mobile phone businesses are expected to show full-year sales growth of 15 percent."
Analysts agreed Nokia's fourth-quarter numbers were strong, but some questioned the company's optimism for 2002 growth.
"Nokia may have to trim their forecasts as they seem ambitious in a weak economic environment," Susan Anthony, an analyst at Credit Lyonnas, told Reuters.
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Nokia, which said it increased its market share in mobile phones to about 37 percent in 2001 from 32 percent in 2000, expects total market sales in 2002 to grow between 10 and 15 percent to 420-440 million units. This was roughly in line with the 420 million plus figure forecast by Motorola.
"Double digit market volume growth is expected to continue in 2003," Nokia said in a statement.
Meanwhile, chief executive Jorma Ollila told a news conference in Helsinki that he did not see an economic recovery in Nokia's biggest market, the U.S., until the fourth quarter of this year.
But he was more optimistic about the Chinese market, saying he expected it to grow at the same 10 to 20 percent pace as the global market in 2002.
Earlier this week, investment bank Morgan Stanley lowered its rating for Nokia to "underperform" from "neutral" - mainly due to concern over weak growth in the Chinese telecom market. Morgan Stanley also set a price target of 15 for the company's stock. 
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