Nokia stock drop reversal hangs on profit surprise
Nokia Oyj shareholders say a rebound from the stock's worst quarter in almost four years depends on Chief Executive Officer Olli-Pekka Kallasvuo beating earnings estimates for the fourth straight time.
Nokia, the world's biggest mobile-phone maker, fell 24 percent in Helsinki trading in the first three months of the year, their biggest drop since the second quarter of 2004, on concern sales growth in developed markets such as Europe will slow. Espoo, Finland-based Nokia increased its market share to 40 percent last year by selling handsets for less than $50 and pricier models with satellite navigation.
Kallasvuo will probably report first-quarter net income rose 41 percent to 1.38 billion euros ($2.18 billion), or 35 cents a share, from 979 million euros, or 25 cents, a year earlier, according to 14 analysts' estimates compiled by Bloomberg.
"They need to report at least in line, and the focus will be more on what they say about the second quarter," said Jyrki Uurasmaa, a fund manager at Glitnir Asset Management in Helsinki, which oversees the equivalent of $4.7 billion, including Nokia shares. "There's been some worrying news from suppliers."
Before yesterday, the stock has dropped 24 percent this year, valuing Nokia at 77.7 billion euros, compared with a 22 percent slide in the Dow Jones Europe Stoxx Technology Index. The stock had its best year since 1999 in 2007, gaining 71 percent.
The report will be published today. Nokia declined to comment on the earnings before the release, spokesman Brett Young said.
Chief Financial Officer Richard Simonson said again last month the handset market will expand 10 percent this year, sending Nokia's stock 8.2 percent higher. Demand in Brazil, Russia, India and China continues to increase, he said. Nokia gets less than 5 percent of sales from the US.
Sony Ericsson Mobile Communications Ltd, the world's fourth-largest mobile-phone maker, said on March 19 first-quarter earnings and revenue will fall because of slower handset sales, higher research costs and a parts shortage.
Texas Instruments Inc, the second-biggest maker of chips for mobile phones, said on March 10 demand for semiconductors used in handsets that can download music and access the Web was lower than anticipated.
"Investors have primarily focused on negative news from suppliers," said Robert Jacobsen, an analyst at Jyske Bank in Silkeborg, Denmark. Meeting earnings estimates could trigger a gain in the shares, he said.
Sales growth at Nokia may also have been hurt by the weaker dollar, which lost 15 percent against the euro in the past year. About half of Nokia's revenue is in dollars or in currencies closely tracking it, a regulatory filing shows.
Agencies
(China Daily 04/17/2008 page16)
