HELSINKI, Finland - Shares in Nokia Corp. plunged more than 13.5 percent Thursday after the world's largest mobile phone maker downgraded its forecast for the global handset market and posted lower-than-expected earnings in the first quarter.
Nokia reported a net profit of $1.9 billion in the first three months of the year, 25 percent more than $1.6 billion in the same period in 2007 but below analyst forecasts.
Revenue grew 28 percent to $20 billion from $15.6 billion a year earlier, with strong growth of handsets sales in Asia, the Middle East and Africa.
Markets had been expecting a better result: A Factset analyst poll cited by Dow Jones Newswires forecast a 42 percent rise in profit.
Nokia stock closed at $28.76 in Helsinki.
The Espoo, Finland-based company said its market share slipped from 40 percent in the October-to-December quarter to 39 percent in the first quarter this year. But it sold 115 million mobile devices in the first quarter -- up 27 percent from a year earlier, and its market share was 3 points higher than in the first quarter a year ago.
It cautioned that the industry worldwide would be hit by poor economic conditions.
Nokia Chief Executive Olli-Pekka Kallasvuo said he was satisfied with the first-quarter result despite the poor response from investors.
"I can't evaluate market reactions; markets have to make their own evaluations," Kallasvuo said.
Nokia repeated its forecast that the mobile phone market will grow in volume by 10 percent in 2008, but added that the market would lose value compared to 2007 because of the weakened U.S. dollar and an economic slowdown in the U.S and possibly in Europe.
"A fall in the mobile handset market, in euro terms, seems likely this year, and the reason for this is the strong decline in the dollar versus the euro during the early part of the year and last year," Kallasvuo said.
For telephone infrastructure, Nokia changed its 2008 market outlook to "flat," from a previous estimate of "very slight growth," primarily because of the slump of the U.S. dollar.
Pasi Vaisanen, an analyst at Glitnir Bank, said Nokia -- like many European companies -- was suffering from an exposure to markets using the dollar or currencies linked to the dollar.
"We've never seen it more clearly than now," Vaisanen said.
Nokia saw its strongest growth in mobile phone sales in the Asia-Pacific region, which for the first time overtook Europe as the company's biggest market. It sold 34 million units in the region, accounting for more than a third of the company's mobile phone sales.
But selling cheaper handsets in emerging markets continued to push down the closely watched average selling price of Nokia's mobile devices. It fell to $125 in the period, from $132 in the previous quarter and $141 in the first quarter last year.
Europe, with 26 million units, was Nokia's second biggest market in the period, before China, where it sold 21 million units. Its troubled North American market continued to dwindle, with a 46 percent drop in sales to a mere 2.6 million mobile devices sold in the quarter.
"North America, which despite a slowdown still accounts for 16 percent of global handset demand, remains a serious problem-child for Nokia," said Neil Mawston of Strategy Analytics.
He blamed Nokia's "lackluster" portfolio of handsets using the CDMA standard that is popular in the U.S. and weak relationships with some major carriers.
Kallasvuo said Nokia expects to gain market share in the second quarter even though "no major new products" are being launched, and he said he was optimistic about the rest of 2008.
Last year, Nokia sold nearly 440 million handsets.
It employs 116,000 people worldwide.
Nokia's biggest, but distant, competitors -- Samsung, Motorola and Sony Ericsson -- will report first-quarter earnings next week.
The world's fifth-selling handset maker, LG Electronics of South Korea, on Wednesday said record mobile phone sales helped it swing to a profit in the first quarter.
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On the Net:
Nokia: http://www.nokia.com
Nokia reported a net profit of $1.9 billion in the first three months of the year, 25 percent more than $1.6 billion in the same period in 2007 but below analyst forecasts.
Revenue grew 28 percent to $20 billion from $15.6 billion a year earlier, with strong growth of handsets sales in Asia, the Middle East and Africa.
Markets had been expecting a better result: A Factset analyst poll cited by Dow Jones Newswires forecast a 42 percent rise in profit.
Nokia stock closed at $28.76 in Helsinki.
The Espoo, Finland-based company said its market share slipped from 40 percent in the October-to-December quarter to 39 percent in the first quarter this year. But it sold 115 million mobile devices in the first quarter -- up 27 percent from a year earlier, and its market share was 3 points higher than in the first quarter a year ago.
It cautioned that the industry worldwide would be hit by poor economic conditions.
Nokia Chief Executive Olli-Pekka Kallasvuo said he was satisfied with the first-quarter result despite the poor response from investors.
"I can't evaluate market reactions; markets have to make their own evaluations," Kallasvuo said.
Nokia repeated its forecast that the mobile phone market will grow in volume by 10 percent in 2008, but added that the market would lose value compared to 2007 because of the weakened U.S. dollar and an economic slowdown in the U.S and possibly in Europe.
"A fall in the mobile handset market, in euro terms, seems likely this year, and the reason for this is the strong decline in the dollar versus the euro during the early part of the year and last year," Kallasvuo said.
For telephone infrastructure, Nokia changed its 2008 market outlook to "flat," from a previous estimate of "very slight growth," primarily because of the slump of the U.S. dollar.
Pasi Vaisanen, an analyst at Glitnir Bank, said Nokia -- like many European companies -- was suffering from an exposure to markets using the dollar or currencies linked to the dollar.
"We've never seen it more clearly than now," Vaisanen said.
Nokia saw its strongest growth in mobile phone sales in the Asia-Pacific region, which for the first time overtook Europe as the company's biggest market. It sold 34 million units in the region, accounting for more than a third of the company's mobile phone sales.
But selling cheaper handsets in emerging markets continued to push down the closely watched average selling price of Nokia's mobile devices. It fell to $125 in the period, from $132 in the previous quarter and $141 in the first quarter last year.
Europe, with 26 million units, was Nokia's second biggest market in the period, before China, where it sold 21 million units. Its troubled North American market continued to dwindle, with a 46 percent drop in sales to a mere 2.6 million mobile devices sold in the quarter.
"North America, which despite a slowdown still accounts for 16 percent of global handset demand, remains a serious problem-child for Nokia," said Neil Mawston of Strategy Analytics.
He blamed Nokia's "lackluster" portfolio of handsets using the CDMA standard that is popular in the U.S. and weak relationships with some major carriers.
Kallasvuo said Nokia expects to gain market share in the second quarter even though "no major new products" are being launched, and he said he was optimistic about the rest of 2008.
Last year, Nokia sold nearly 440 million handsets.
It employs 116,000 people worldwide.
Nokia's biggest, but distant, competitors -- Samsung, Motorola and Sony Ericsson -- will report first-quarter earnings next week.
The world's fifth-selling handset maker, LG Electronics of South Korea, on Wednesday said record mobile phone sales helped it swing to a profit in the first quarter.
___
On the Net:
Nokia: http://www.nokia.com
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