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Nokia's first quarter results disappoint
2008-04-17
Nokia, the world's leading mobile phone maker, on Thursday posted strong first quarter results but saw its market share slip and missed analyst forecasts, sending its share price tumbling. Net profit for the January-March period rose 25 percent to 1.22 billion euros (1.95 billion dollars) from the same quarter a year ago, while sales grew 13 percent to 12.66 billion euros, the company said in a statement. The company said sales during the quarter jumped 28 percent to 12.66 billion euros but this fell short of expectations of 12.74 billion euros, according to analysts. The Finnish mobile phone giant's market share in the first quarter stood at 39 percent, up from 36 percent a year ago but down from 40 percent in the fourth quarter of 2007. When the group published its annual results in January, it warned that its first quarter performance might suffere compared with the last three months of 2007. Nokia thus sold 115.5 million devices during the first quarter, up 26.8 percent year-on-year but down 13.5 percent compared to the 133.5 million devices sold in the fourth quarter last year. The Finnish group however said on Thursday it expected its market share to increase in the second quarter compared to the first three months of the year. "While we will not have major new products shipping in the second quarter, we expect a number of new products to be shipping and to have a positive impact on our results in the second half of 2008," Nokia chief executive Olli-Pekka Kallasvuo said in the earnings statement. The company said its handsets on average sold for 79 euros each in the first quarter, missing analyst estimates for a price of 81 euros. Its average selling price stood at 89 euros in the first quarter of 2007 and 83 euros in the previous quarter. "The average selling price seems to be falling faster than expected," Pohjola Bank analyst Hannu Rauhala told AFP. Nokia meanwhile reiterated that it expected industry mobile device volumes to grow by around 10 percent in 2008 from the approximately 1.14 billion units it estimates were sold last year. "The overall device market developed as expected (in the first quarter), with the greatest demand in emerging markets, where our position is very strong," Kallasvuo said. That market was however expected to decline in euro terms this year compared to 2007, the company cautioned. "The change from our previous estimate of value growth for this market primarily reflects the negative impact of the recently weakened US dollar, the general economic slowdown in the US, and possibly going forward, some economic slowdown in Europe," the company explained. "It was slightly surprising that they said that in euro terms the handset market would decrease this year. That was disappointing," Rauhala said. Just over an hour after publishing its results, Nokia saw its shares plunge 9.88 percent to 18.88 euros on the Helsinki stock market, which was down 0.87 percent.
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