Nokia forecasts slight profit, flat sales in Q3

Despite strong consumer demand, third-quarter sales at Nokia are expected be flat or slightly lower compared to the same period last year due to the depreciation of the U.S. dollar's value, the company said Tuesday.

The Espoo, Finland, company expects pro-forma earnings per share to be at the high end of, or slightly above, the €0.15 to €0.17 range forecast in July, it said in a statement. That compares with €0.18 for the third quarter of 2002.

Nokia said it still expects global handset volume to rise 10 percent this year from 405 million units in 2002, though those sales will mainly be of cheaper handsets. "We have made great progress in all markets," said Olli-Pekka Kallasvuo, chief financial officer (CFO) of Nokia, in a conference call with analysts.

The average selling prices of phones are expected to fall both year-on-year and sequentially, Kallasvuo said. "The nature of the market has shifted towards the lower end," he said.

Kallasvuo highlighted expected third-quarter growth in the U.S. and Americas. "The progress we've made in the U.S. in CDMA (Code Division Multiple Access) and in other markets ... has been very good," he said.

Nokia is also experiencing sales growth in Europe and Africa, "positive trends in China" due in large part to the tri-band Nokia 6108 handset launched in May, and "progress in India," Kallasvuo said.

Nokia claims to hold 39 percent of the market, selling more mobile handsets than competitors Motorola, Samsung Electronics and Siemens combined. "We are very happy with market share progress (in the third quarter). We are gaining in most of the markets, but it is premature to comment on if we will reach the 40 percent mark," Kallasvuo said.

The company's CFO touted the progress being made on products using 3G (third generation) technology, saying that Nokia was seeing an evolution in overall demand for 3G products as well as progress in developing the services for the 3G handsets. "The maturity of the technology has made great progress and so have we," Kallasvuo said. "But there still is a great amount of work in the industry as a whole to be done on the interoperability issue."

Nokia Networks, the division that sells mobile phone networks to operators, expects third-quarter sales to decline by between 15 percent and 20 percent year-on-year, though that market appears to be stabilizing, the company said.

Nokia's restructuring of the division in response to the industrywide problem of growing debt and stagnating sales, is continuing on plan. "That market we feel has bottomed, but it remains to be seen how and at what pace it will grow again," Kallasvuo said.

Nokia will release its third quarter results on Oct. 16, the company said.

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