Nokia's Q3 Earnings Beat Lowered Expectations

Nokia the world's largest supplier of mobile phones, on Thursday reported better-than-expected earnings for its third quarter, citing strong network equipment sales and smooth product transitions in its handset business.

Net profit for the quarter ended Sept. 30 rose to 892 million euros ($A1.4 billion), or 19 euro cents per diluted share, as compared to 638 million euros and 13 euro cents, respectively, for the corresponding quarter a year ago.

Analysts had lowered their forecast for the third quarter after Nokia in July warned that earnings per share would fall short of the 20 euro cents per share the company posted for the second quarter.

In a conference call later on Thursday, Nokia Chairman and Chief Executive Officer Jorma Ollila said the company had not been fully satisfied with its product mix going into the third quarter, but that a strong September had saved the day. "We just had a blockbuster September, a very strong month," Ollila said. "There is nothing more to it."

Third-quarter revenue jumped by 50 per cent to 7.58 billion euros, up from 5.04 billion euros in last year's third quarter, Nokia said.Operating profit, meanwhile, increased by 39 per cent to 1.32 billion euros, up from 951 million euros last year.

One of the few blemishes in the report was that Nokia saw its handset operating margin erode to 19.6 per cent, down from 21.9 per cent in the year-ago quarter and 25 per cent in this year's second quarter.

Looking forward, Ollila said the company expects to report record-breaking per-share earnings for its fourth-quarter, and reiterated that sales growth in 2001 will be in the 25 per cent to 35 per cent range, with continued high profitability.

"We have entered the fourth quarter in a very strong position," Ollila said.

Nokia also said it still expects worldwide handset sales of more than 400 million units this year, rising to around 550 million units in 2001.

The better-than-expected third-quarter profit and bullish outlook gave Nokia's share price a boost in trading Thursday, reversing a recent plunge. In late-afternoon trading on the Helsinki Stock Exchange, Nokia shares were selling at 44.90 euro each, up 25.4 per cent on the day.

Nokia late Wednesday said the third-quarter results would be announced Thursday, one week ahead of the original release date of Oct. 26.

Nokia, in Espoo, Finland, can be reached via the Web at http://www.nokia.com/.

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