woensdag, februari 23, 2005

Nokia - Nokia plans no price cuts, pins hopes on China

Nokia plans no price cuts, pins hopes on China

Wed Feb 23, 2005 02:18 AM ET (Adds global forecast in last paragraph)
By Tamora Vidaillet
BEIJING, Feb 23 (Reuters) - The world's top mobile phone maker, Finland's Nokia (NOK1V.HE: Quote, Profile, Research) , does not plan to cut prices this year after clawing back some market share and expects strong sales in booming China to help drive future growth.
Chief Executive Officer Jorma Ollila told reporters that tactical price cuts on some products in the first half of 2004 had helped unit sales and market share in the latter part of last year.
"Price cuts are not part of our (overall) strategy this year," Ollila said during a visit to mark two decades of Nokia doing business in China.
Last year's price cuts had "only a minor impact on our margins year-on-year", he said, without elaborating.
But underscoring heated competition in the global handset market, Ollila said price reductions in the industry were likely to continue.
Nokia had slashed prices to try to regain market share lost to rivals including the likes of Motorola Inc. (MOT.N: Quote, Profile, Research) and Samsung Electronics Co. Ltd. (005930.KS: Quote, Profile, Research) .
The firm that produces one in every three phones sold around the world said it aimed to increase market share, partly by ramping up production of more sophisticated phones.
Nokia posted better-than-expected quarterly earnings in the fourth quarter of 2004 and has predicted that sales would post their first quarterly rise in four years in the first quarter.
Still, analysts have said 2005 is set to be a tougher year for Nokia and its competitors. Phone unit sales are forecast to grow by just 8 percent, according to market research group Strategy Analytics, a quarter of the growth pace seen in 2004 and below Nokia's forecast of around 10 percent.
TAPPING THE BOOM
Nokia is pinning its hopes on China, where annual economic growth of 8 percent or above since 2002 has made the country one of the biggest recipients of global foreign direct investment.
"We had a very, very strong year (in China) last year and we expect that strong performance to continue," he said.
Nokia China's exports of cellphones and telecoms infrastructure jumped 56 percent last year to hit a record $3.3 billion. China sales soared 44 percent to $3.6 billion.
Nokia planned to strengthen its distribution channels to tap rural areas where incomes are growing, to help it gain market share in the face of competition from low-cost domestic competitors such as Ningbo Bird Co. Ltd. (600130.SS: Quote, Profile, Research) and TCL Communication Technology Holdings Ltd. (2618.HK: Quote, Profile, Research) .
Third party estimates suggested Nokia had between a 19 and 22 percent share of China's cellphone market compared to between 16 and 17 percent in 2002, Ollila said.
The expected roll-out of third-generation mobile networks and the likely issuance of 3G licences in the coming 18 months offered another growth opportunity, he said.
Over the past five years, China had represented around 9 percent of global revenue. Last year it stood for 10 percent after the United States, which accounted for around 13 percent.
Expected to nearly double subscriptions in five years, China was on track to become the world's biggest cellphone market in the world, after the United States, he said.
Nokia estimated that the total global mobile subscriber base would reach 3 billion by 2010, from 1.7 billion at the end of 2004. Of these new subscriptions, nearly one quarter were expected to be in China, it said in a statement.

posted at 2:39 a.m.