Markets braced for Nokia gloom

Analysts warn that Nokia may not even reach the downgraded targets it set itself in last month's profit warning
Written by Graeme Wearden, Contributor

With Nokia poised to announce its latest financial results this afternoon, experts have warned that the Finnish company could bring more bad news to the already-troubled mobile sector.

Last month the company was forced to downgrade its predicted earnings in the second quarter of this year, saying weak global mobile phone demand had pushed second-quarter profit expectations down by 15 percent to 25 percent. It also revised its estimate for the total number of mobile phones that would be sold worldwide in 2001 -- to 405 million, compared to an earlier prediction of over 500 million.

There are concerns, though, that Nokia may not even reach its downgraded targets. "We're braced for very bad news from Nokia," warned Simon Buckingham, analyst at Mobile Lifestreams. "We expect that its earnings and future expectations will be even worse than it warned last month." Other analysts are also been reported to be concerned that Nokia may disappoint.

As the dominant manufacturer of mobile handsets, Nokia's performance is seen as critical to the health of the whole mobile sector -- which has been suffering badly in recent months. Handset sales, which were buoyant last year, are below earlier expectations, and there are serious concerns that many markets are reaching saturation point.

Rival manufacturer Motorola announced its second consecutive loss-making quarter last week, blaming difficulties in the telecom and semiconductor industries.

There are hopes that next-generation networks could help to pull the mobile sector out of its gloom. However, Buckingham warns that Nokia -- which made so much money from the boom in GSM -- may not get a massive benefit from 3G.

"Nokia is late with GPRS, and won't have a GPRS-enabled handset on the market until the end of this year. The good old days for Nokia in 2G won't necessarily translate to the GPRS world," Buckingham said. He believes that, following the Sony tie-in with Ericsson, the big players in 3G will probably be Japanese.

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