Nokia cuts sales forecast as demand stays weak

Nokia Corp., the world's largest mobile phone maker, cut its second quarter sales forecast on Tuesday, but said earnings per share should meet its earlier guidance.

Company-wide second-quarter sales are now expected to drop by between 2 percent and 6 percent compared to the year ago period, totalling between €6.9 billion (US$6.5 billion) and €7.2 billion, the Espoo, Finland, company said in a statement. In April, Nokia predicted sales would grow by between 2 percent and 7 percent.

However, Nokia is sticking to its forecast for pro-forma earnings per share of between €0.18 and €0.20. The company is due to present its second quarter earnings on July 18.

Nokia Networks, the division that sells mobile phone networks to operators and accounts for about a fifth of Nokia's sales, is expecting sales to drop by 20 percent to 25 percent, putting pressure on overall sales. In April, Nokia forecast a year-on-year sales decline of at most 10 percent for its networks unit, but operators have cut back on spending, instead focusing on reducing debt. In the first quarter, Nokia Networks recorded a 29 percent drop in sales year on year, to €1.44 billion.

Nokia also cut its growth forecast for mobile phones, its biggest business. The company now expects 0 percent to 4 percent growth from sales, instead of the previously predicted 5 percent to 10 percent sales growth.

Although Nokia predicts slower growth in mobile phone sales, it expects to increase its market share in the second quarter to 38 percent. According to research firm Gartner Inc., Nokia's mobile phone market share dropped to 34.7 percent in the first quarter, from 36.9 percent in the fourth quarter.

Nokia expects the number of handsets shipped by all market players to grow 5 percent in the second quarter from the 89 million handsets it says shipped in the first quarter.

Shares in Nokia (NOK1V.HE) already lost more than half their value this year and were down almost 2 percent at €13.05 in mid-afternoon trading on the Helsinki stock exchange.

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