Nokia - Nokia's Q2 Earnings
Finnish mobile-phone maker Nokia Corp. on Thursday said second-quarter net profit rose 15% to 799 million euros, or 18 euro cents a share, on sales of 8.06 billion euros. The results missed the average earnings forecast of analysts polled by Thomson First Call by a penny. Nokia's market share in the quarter came in at about 33%. Looking ahead, Nokia said it sees third-quarter earnings in the range of 14 to 17 euro cents a share on sales between 7.9 billion and 8.2 billion euros. Thomson First Call's forecast is for third-quarter EPS of 20 euro cents a share. Nokia also upgraded its forecast for full-year market estimate by 20 million units to 760 million units. But as the growth came primarily from emerging markets where low-end products predominate and pricing pressures are intense, Nokia said that average selling prices continued to decline in the quarter. Nokia said it expects this trend to continue for the rest of the year. Shares were last down close to 8%.
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Nokia's Q2 Earnings Rise 15 PercentThursday July 21, 8:33 am ET By Mans Hulden, Associated Press Writer
Nokia's Second-Quarter Earnings Rise 15 Percent, but Outlook Falls Below Expectations
HELSINKI, Finland (AP) -- Nokia Corp. said Thursday second-quarter earnings increased 15 percent and its market share in mobile devices was growing, but shares tumbled as the company's outlook for the current three-month period fell below expectations.
The world's top handset maker said net profit for the three months ending in June came to 799 million euros ($971 million), up from 695 million euros in the same period last year. Sales rose 25 percent to 8.06 billion euros, from 6.46 billion euros ($7.85 billion) in the second quarter of 2004.
The results were slightly lower than expected, and investors appeared disappointed in Nokia's cautious forecast for the third quarter, with its estimated earnings-per-share of 14 euro cents to 17 euro cents (17-21$) falling well below analysts' predictions.
Nokia shares dipped 10 percent to 13.23 euros ($15.96) in afternoon trading on the Helsinki exchange.
While Nokia said its market share in mobile devices was up one point from the first quarter to 33 percent, the average phone price was 105 euros ($127), down 4.5 percent from the previous quarter, and was expected to keep falling.
"The second quarter results are within the range of expectations, but Nokia is being very cautious in its third-quarter forecast," said chief analyst Jussi Hyoty at FIM Securities. "There's no reason why Nokia couldn't be profitable while selling low-end phones, but the third-quarter expectation sends the message that it will be difficult to maintain prices."
Chief Executive Jorma Ollila said the reported growth came primarily from emerging markets where low-end products predominate, and margins remain low.
He predicted industry consolidation among market leaders in both handsets and network suppliers, saying: "This is a game that Nokia is well positioned to win."
Nokia said it sold 60.8 million phones in the period, up from 45.4 million a year ago. Sales in China were up 76 percent, while North America remained Nokia's weakest market, showing a 22 percent drop in sales with 6 million phones sold.
Nokia said it was driven to focus competition at the entry-level phones, a market Ollila said was "increasingly challenging."
The company forecast third-quarter sales at 7.9 billion euros to 8.2 billion euros, up from 7.1 billion euros in 2004.
Nokia is shifting focus to emerging markets, such as Asia, Africa, Russia, and South America, which Ollila has predicted will show "dizzying growth" in the next five years.
Nokia's chief rival, Motorola Inc., said in its earnings report Wednesday that it had picked up 1.7 percent in market share since the first quarter, totaling 18.1 percent of global cell-phone sales. Motorola also said it would be targeting new products at Nokia's core range.
Gartner Dataquest estimated Nokia's first-quarter market share at 30.4 percent in May, with Motorola at 16.8 percent.
Earlier Thursday, wireless equipment maker LM Ericsson reported a 16 percent increase in second-quarter profit on growing sales and upgraded its market outlook for mobile systems.
Nokia, based in Espoo just outside the Finnish capital, has sales in 130 countries and about 55,500 employees.
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Nokia's Q2 Earnings Rise 15 PercentThursday July 21, 8:33 am ET By Mans Hulden, Associated Press Writer
Nokia's Second-Quarter Earnings Rise 15 Percent, but Outlook Falls Below Expectations
HELSINKI, Finland (AP) -- Nokia Corp. said Thursday second-quarter earnings increased 15 percent and its market share in mobile devices was growing, but shares tumbled as the company's outlook for the current three-month period fell below expectations.
The world's top handset maker said net profit for the three months ending in June came to 799 million euros ($971 million), up from 695 million euros in the same period last year. Sales rose 25 percent to 8.06 billion euros, from 6.46 billion euros ($7.85 billion) in the second quarter of 2004.
The results were slightly lower than expected, and investors appeared disappointed in Nokia's cautious forecast for the third quarter, with its estimated earnings-per-share of 14 euro cents to 17 euro cents (17-21$) falling well below analysts' predictions.
Nokia shares dipped 10 percent to 13.23 euros ($15.96) in afternoon trading on the Helsinki exchange.
While Nokia said its market share in mobile devices was up one point from the first quarter to 33 percent, the average phone price was 105 euros ($127), down 4.5 percent from the previous quarter, and was expected to keep falling.
"The second quarter results are within the range of expectations, but Nokia is being very cautious in its third-quarter forecast," said chief analyst Jussi Hyoty at FIM Securities. "There's no reason why Nokia couldn't be profitable while selling low-end phones, but the third-quarter expectation sends the message that it will be difficult to maintain prices."
Chief Executive Jorma Ollila said the reported growth came primarily from emerging markets where low-end products predominate, and margins remain low.
He predicted industry consolidation among market leaders in both handsets and network suppliers, saying: "This is a game that Nokia is well positioned to win."
Nokia said it sold 60.8 million phones in the period, up from 45.4 million a year ago. Sales in China were up 76 percent, while North America remained Nokia's weakest market, showing a 22 percent drop in sales with 6 million phones sold.
Nokia said it was driven to focus competition at the entry-level phones, a market Ollila said was "increasingly challenging."
The company forecast third-quarter sales at 7.9 billion euros to 8.2 billion euros, up from 7.1 billion euros in 2004.
Nokia is shifting focus to emerging markets, such as Asia, Africa, Russia, and South America, which Ollila has predicted will show "dizzying growth" in the next five years.
Nokia's chief rival, Motorola Inc., said in its earnings report Wednesday that it had picked up 1.7 percent in market share since the first quarter, totaling 18.1 percent of global cell-phone sales. Motorola also said it would be targeting new products at Nokia's core range.
Gartner Dataquest estimated Nokia's first-quarter market share at 30.4 percent in May, with Motorola at 16.8 percent.
Earlier Thursday, wireless equipment maker LM Ericsson reported a 16 percent increase in second-quarter profit on growing sales and upgraded its market outlook for mobile systems.
Nokia, based in Espoo just outside the Finnish capital, has sales in 130 countries and about 55,500 employees.
posted at 8:48 a.m.
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