Nokia stock drops on market share fall
Posted on: Saturday, 17 April 2004, 06:00 CDT
Mobile telephone maker Nokia yesterday rattled investors with news that it is losing market share to its rivals.
It also warned second quarter earnings would be below market expectations.
The double blow sent Nokia's shares tumbling almost 10% to euros 12 as investors switched into other mobile phone makers' stock.
Nokia chairman and chief executive Jorma Ollila said yesterday that, while the overall mobile market had grown by 29%, Nokia's sales had increased by a more pedestrian 19% in the first three months of the year.
That meant Nokia's share of the global market had fallen to 35%, compared with its own target of about 40%.
Nokia acknowledged that sales of its phones in Europe and the United States were hit by gaps in its product range. It said it had already introduced a number of new models, including its first fashion category clamshell model, and ex pected to launch a total of 40 this year, although shipments of the new phones will come through mainly in the second half. "There have been execution delays. We should have been six months ahead, ideally, with new product introductions," Mr Ollila said.
Overall, Nokia sales, including networks, multimedia and enterprise solutions as well as phones, fell 2% to euros 6.6bn (pounds 4.4bn), though Nokia said they were up 7% in constant currency terms.
Earnings per share for the first quarter were a better than expected euros 0.17, but Nokia warned that in the second quarter they would be between euros 0.13 and euros 0.15, well below the euros 0.19 recorded in the second quarter of 2003.
"This is bad, there is no room for explanations . . . The second quarter will be weakish and eyes are already on the second half," said Jussi Hoyty, an analyst at FIM Securities.
Earlier South Korea's Samsung said that its share of the mobile market had risen by four percentage points to 14%.
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