Nokia - Nokia Q1 results beat all expectations

Nokia Q1 results beat all expectations

Mobile phone giant Nokia reported January-March earnings and sales above expectations on Thursday, boosted by strong demand for handsets around the world, sending its shares sharply higher.The company, which sells more than one in three of all mobile phones, boosted its share of a buoyant handset market, even though its main rival Motorola reported an even bigger sales increase earlier this week.Many Nokia phones were sold in markets like Latin America, China, the Middle East and Africa -- where consumers usually buy less expensive phones -- but it said it had also sold an increasing proportion of more expensive models."We did continue to gain share in China and India. Even if a large proportion of the products sold are in the entry level and low-priced, we can continue to maintain and even, hopefully, improve our margins," Nokia's outgoing Chief Executive Jorma Ollila told CNBC television.The world's top cellphone maker said its first-quarter earnings per share rose to 0.25 euro, compared with expectations in the range 0.19-0.23 euro in a Reuters poll of 17 analysts.First-quarter sales rose to 9.5 billion euros ($11.7 billion) from 7.4 billion a year earlier, also beating all forecasts in the poll.Nokia's shares were 7.6 percent higher at 18.75 euros by 1109 GMT. They have risen 21 percent so far this year, putting them at a two-year high, compared with a DJ Stoxx Technology Index <.SX8P> gain of about 13 percent. Motorola stock has fallen about 0.4 percent over the same period.Nokia stock trades now at 18.7 times expected 2006 earnings, according to Reuters data, compared with 18.1 times for Motorola, and 17.3 times for Sweden's Ericsson , its rival in the mobile phone infrastructure market."When Nokia has a bad year you can see it from Q1, so because they've produced a good Q1 it is a good omen for the rest of the year," said Nomura analyst Richard Windsor.The Finnish company, which has revamped its product portfolio since 2004, when it lost market share to rivals with more popular designs, benefited in the first quarter from strong sales of its N-series multimedia phones, such as the N70 model, the top revenue generator for the company in the quarter.HOT COMPETITIONNokia said it sold 75.1 million phones in the quarter, 40 percent more than a year ago, and said its market share rose to 35 percent. Its closest rival Motorola sold 46.1 million phones over the same period, up 61 percent year-on-year."In handsets, I was a bit afraid of how its market share has developed, as Motorola has been very aggressive in the markets. Nokia's sales volumes are very good, and the market share increasing to 35 percent is a very positive sign," said eQ Bank analyst Jari Honko.Nokia said it expected to hold on to its share of the market in the second quarter.Nokia phones sold for an average 103 euros in the first three months -- the highest level in three quarters -- but that is still 6 percent down on the year-earlier figure of 110 euros.Analysts said Nokia's networks unit was the weak spot of the report, with the division's operating profit margin falling to 8.8 percent from 15.4 percent a year earlier, due in part to strong pressure on prices. (Additional reporting by Rex Merrifield, Laura Vinha, Terhi Kinnunen, Arild Moen in Helsinki and Patrick Lannin and Per Danielson in Stockholm)