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Nokia says third quarter profit will be at high end or beat earlier

Posted on: Tuesday, 9 September 2003, 06:00 CDT

HELSINKI, Finland (AP) -- Nokia Corp., the world's largest cell phone maker, said Tuesday its third-quarter earnings could beat its earlier forecast on strong profitability in its mobile handset business and signs of a turnaround in its ailing network operations.

But its shares fell as it said sales revenue from mobile handsets would be flat to slightly lower mainly because of depreciation of the dollar.

Nokia expects its pro forma earnings per share will be ``at the high end or slightly above previously stated guidance of euro0.15 to euro0.17 (16 to 19 cents)'' for the July-September period.

The group is scheduled to report third-quarter earnings on Oct. 16.

It expects strong profitability in mobile handsets but said sales revenue would be ``flat or slightly down'' from a year ago mainly because of depreciation of the U.S. dollar.

Nokia, which claims a 38 percent market share in global mobile phone sales, said overall handset sales volume had been strong in the quarter, but didn't provide any figures.

After a brief surge in trading, shares of Nokia fell 4.3 percent to close at euro14.43 ($15.98) in trading on the Helsinki Stock Exchange.

Jussi Hyoty, chief analyst at FIM Securities, said that despite Nokia's slightly improved outlook markets were disappointed by predictions of flat handset sales revenue.

``The market was hoping for better sales of mobile phones. As volumes increase it means that the average price of handsets will fall,'' Hyoty said. ``Then there's also the exchange rate factor, which has had a negative effect here too.''

Nokia said its mobile phone unit would continue to perform better than most of its competitors.

``Nokia continues to expect the company to show faster-than-market volume growth of well over 10 percent year on year in the third quarter,'' it said.

Like its rivals, Nokia's network operations have been hit by a continuing worldwide slump in demand for wireless equipment. The company said it expects network sales to decline by as much 20 percent in the quarter, in line with previous estimates, but added that the market ``appears to be stabilizing and ongoing restructuring at Nokia Networks is continuing on plan.''

This year, Nokia has announced more than 600 job cuts in network operations in the United States, Britain, Sweden and Finland, which employed more than 18,500.

Nokia's profit last year was euro3.4 billion ($3.6 billion) on sales of euro30 billion ($32.2 billion).

Nokia, based in Espoo, just outside the capital, Helsinki, has sales in 130 countries with some 53,000 employees.

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On the Net:

Nokia: http://www.nokia.com

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