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Apr-18-2008

Helsinki shares end higher, led by TietoEnator; Cargotec slumps UPDATE

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Nokia stock closed at $28.76 in Helsinki. (More...)
Part of it was attributable to the falling value of the U.S. dollar, which has affected markets globally. (More...)
Last month, Nokia's shares were also badly impacted following Texas Instruments' comments on 3G order cancellations and Sony Ericsson's recent warning on handset sales. (More...)
In early trading, Nokia shares have plunged $4.19, or 12.4%, to $29.50. (More...)
NSN incurred a 100-million Euro restructuring charge in the first quarter, and Simonson said it expects the second quarter's restructuring costs to be even higher. (More...)
Compared with last year, the handset-maker is three points ahead, and the quarterly blip is not likely to offer much opportunity for either Sony Ericsson or Motorola (nyse: MOT - news - people ). (More...)
Kallasvuo did not provide provide any figures. (More...)

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Nokia stock closed at $28.76 in Helsinki. The Espoo, Finland-based company said its market share slipped from 40 percent in the October-to-December quarter to 39 percent in the first quarter this year. It sold 115 million mobile devices in the first quarter — up 27 percent from a year earlier, and its market share was 3 points higher than in the first quarter a year ago. It cautioned that the industry worldwide would be hit by poor economic conditions. Nokia Chief Executive Olli-Pekka Kallasvuo said he was satisfied with the first-quarter result despite the poor response from investors. "I can't evaluate market reactions; markets have to make their own evaluations," Kallasvuo said. Nokia repeated its forecast that the mobile phone market will grow in volume by 10 percent in 2008, but added that the market would lose value compared to 2007 because of the weakened U.S. dollar and an economic slowdown in the U.S and possibly in Europe. "A fall in the mobile handset market, in euro terms, seems likely this year, and the reason for this is the strong decline in the dollar versus the euro during the early part of the year and last year," Kallasvuo said. For telephone infrastructure, Nokia changed its 2008 market outlook to "flat," from a previous estimate of "very slight growth," primarily because of the slump of the U.S. dollar. [1] "The overall device market developed as expected (in the first quarter), with the greatest demand in emerging markets, where our position is very strong," Kallasvuo said. He added in a news conference later Thursday that Nokia had "not seen any meaningful change" in the pace by which consumers were replacing their mobile phones in Europe or elsewhere. The overall market was however expected to decline in euro terms this year compared to 2007, the company cautioned. "The change from our previous estimate of value growth for this market primarily reflects the negative impact of the recently weakened U.S. dollar, the general economic slowdown in the U.S., and possibly going forward, some economic slowdown in Europe," the company explained. "It was slightly surprising that they said that in euro terms the handset market would decrease this year. That was disappointing," Rauhala said.[2]

The shares retreated nearly 13 percent Thursday (April 17) despite the excellent results and following comments in an analysts briefing that suggested the value of the overall global mobile device market would drop in Euro terms in 2008 compared with last year because of the weak dollar and slower global economic growth. Olli Pekka Kallasvuo, chief executive, insisted a combination of slower growth and rising labor and raw material costs would have little impact on demand for mobile phones, which he described as "necessity items". Nokia still expects the number of phones sold industry-wide to grow 10 per cent in 2008 but these sales are expected to generate less revenue for suppliers as average sale prices per handset fall.[3] The Finnish company said that handset sales had peaked, despite strong growth in emerging markets. It sold 115.5 million handsets in the first quarter, boosting its global market share to 39 per cent but trailing analysts' predictions of 40 per cent. Nokia shares closed down more than 13 per cent at €18.12 in Helsinki, their biggest one-day fall since April 2004. Olli-Pekka Kallasvuo, the chief executive, said that the increase in market share was down to demand for cheap phones in emerging markets, such as India and China, and more expensive handsets with satellite navigation such as the N95. He predicted that sales in developed markets would decline this year and average selling prices would continue falling.[4]

Shares in Nokia have fallen 10% after the Finnish mobile firm reported weak U.S. sales and cast doubt over industry growth prospects this year. Its U.S. handset sales fell 46% in the first quarter of the year and, despite strong sales in other regions, Nokia's global market share dipped slightly. It also warned that the value of total mobile phone sales, denominated in euros, could fall this year.[5]

Revenue increased 28 percent to 12.6 billion euros ($20 billion), from 9.8 billion euros a year earlier, with strong growth of handsets sales in Asia, the Middle East, Africa and Latin America. Sales of cheaper handsets in those regions continued to push down the closely watched average selling price of Nokia's mobile devices. It fell to 79 euros ($125) in the period, from 89 euros in the same period last year, and 83 euros in the previous quarter. Nokia also said its market share had fallen slightly to 39 percent, from 40 percent in the previous quarter.[6] The firms revenue increased by 28 percent, to 12.6 billion Eeuros ($20 billion) from 9.8 billion Euros last year, with increased demand for handsets in Asia, the Middle East, Africa and Latin America. Nokia had more than a third or 40 percent of all its mobile phone sales in Asia-Pacific region which surpassed Europe as the firms biggest market with where 34 million units sold. Although Nokia posted a slight gain in the first quarter, its profits were less than the forecasts.[7]

Nokia also said it now expects the handset market to fall during 2008, though sales in emerging markets will continue to lift shipments by as much as 10%. In a statement, the company said that its changed outlook '''primarily reflects the negative impact of the recently weakened U.S. dollar, the general economic slowdown in the United States and possibly going forward some economic slowdown in Europe.''' In response to the news, Martin Garner, mobile director at research consultancy Ovum, wrote: '''This is the first set of results reported by Nokia under its new reporting structure, so it is not simple to do a direct comparison on all aspects. It is a very healthy set of results, underlining the strength of Nokia's phone portfolio and its''market position in most areas.''' The handset maker said it sold 115.5 million handsets during the quarter, and estimated its market share at 39%, slightly below analysts''' expectations of 39.7%.[8] According to a number of overseas reports, Nokia has seen its market share slip during the first three months of 2008, but it still managed to outdo its three closest rivals combined. The world's biggest mobile phone maker posted its first quarter results yesterday which revealed it had sold 115.5 million phones in the quarter, more than Samsung, Motorola and Sony Ericsson put together. Nokia says it now has a strong lead in emerging markets including China and India, where it has been fiercely fending off its rivals. Times were much tougher for the company in the U.S. market and Nokia is now predicting an economic slowdown in Europe in the next three months of this year.[9]

"Nokia expects the mobile device market to decline in value in 2008," the company said, blaming the weak dollar and the general economic slowdown in America. Fears of a slowdown in handset sales have led to Nokia's shares sliding 21 per cent this year, valuing the company at about €79 billion. Yesterday's slump took a further €3.29 billion from its market value. India and China are now Nokia's largest markets and strong sales outside Europe and the United States, which account for 75 per cent of the total, helped to boost Nokia's global handset sales by 27 per cent year on year, although they fell 13 per cent compared with the last quarter.[4] The dollar has lost about 15 percent against the euro in the past year, reducing the value of revenue in euros. At constant currencies, Nokia still anticipates the global handset market will grow this year, Simonson said. In its statement on Thursday, Nokia cited "the negative impact of the recently weakened U.S. dollar, the general economic slowdown in the U.S., and possibly going forward some economic slowdown in Europe" for cutting its forecast for the value of the market. Nokia reiterated its projection that the global handset market would rise 10 percent by units this year and that the company aimed to increase its market share. It said average selling prices would continue to fall.[10] HELSINKI, April 17 (Reuters) - Nokia (nyse: NOK - news - people ) said on Thursday it expected the cellphone market would fall in euro terms this year due to the weakening U.S. dollar, knocking more than 13 percent off its shares. The world's largest handset maker reported underlying first-quarter profit rising as expected, but a bigger-than-expected fall in its average selling price for phones also weighed on the stock. The Finnish company cut its forecast for the cellphone market value due to changes in the currency market, but repeated that a boom in emerging markets would lift shipment volumes by 10 percent from 2007.[11]

The dollar's decline and slower U.S. and European economic growth will hurt selling prices and reduce the value of the handset market in euro terms in 2008, Chief Financial Officer Richard Simonson said in a Bloomberg Television interview. Nokia, which gets about half of its revenue in dollars or linked currencies, sold more phones for less during the quarter. "It's a pretty disturbing situation if volumes grow by 10 percent and lower average selling prices and a weaker dollar erase the gain in value,'' said Thor Udenaes, who manages $500 million, including Nokia shares, at SEB Asset Management in Stockholm.[12]

The average selling price of a Nokia phone fell to 79 euros from 83 euros in the fourth quarter. Nokia cut its outlook on the mobile device market, saying it now expects it to decline in value in euro terms in 2008 on weakness in the U.S. dollar, the economic slowdown in the U.S. and possibly a slowdown in Europe.[13] Nokia said it expects the mobile device market to decline in value in euro terms, compared to 2007. It blamed the weak dollar, the economic slowdown in the U.S., and a possible slowdown in Europe. It also had some good things to say. "Nokia had strong profitability in the first quarter, with both operating profit and EPS up significantly year on year," Nokia CEO Olli-Pekka Kallasvuo said in a statement.[14] Bloomberg reports that net income rose to 1.22 billion euros ($1.95 billion) from 979 million euros ($1.56 billion) a year earlier. In its forecast, however, it said it expects the mobile device market to decline in value in Euro terms in 2008, compared to 2007, citing the weakened U.S. dollar, and the general economic slowdown in the U.S., and the "possible" economic slowdown in Europe.[15] "Nokia expects the mobile device market to decline in value in euro terms in 2008, compared to 2007," Nokia said. It cited "the negative impact of the recently weakened U.S. dollar, the general economic slowdown in the U.S., and possibly going forward some economic slowdown in Europe."[16]

Nokia saw profits jump 25% to 1.22bn euros ($1.95bn; '980m). The firm's cautious comments about the industry's sales outlook forced its shares down sharply on the Helsinki Stock Exchange. "The change from our previous estimate for value growth for this market primarily reflects the negative impact of the recently weakened U.S. dollar, the general economic slowdown in the U.S. and, possibly going forward, some economic slowdown in Europe," it said.[5] Despite worsening domestic economic conditions, plenty of large U.S. companies have been able to post solid earnings over the past few quarters thanks to overseas growth. If a company records its revenues in currencies that are appreciating against the dollar - by now a long list - the balance sheet looks stronger when it's time to convert those profits. Nokia's quarterly revenue grew 28% from last year, to 12.66 billion euros ($20.1 billion), but about half those sales were dollar-denominated, which hurt the company in the end. "Currency is certainly a part of why they downgraded their outlook for the market," says James Faucette, an analyst at Pacific Crest Securities.[17]

April 16 (Bloomberg) -- Nokia Oyj shareholders say a rebound from the stock's worst quarter in almost four years depends on Chief Executive Officer Olli-Pekka Kallasvuo beating earnings estimates for the fourth straight time. Nokia, the world's biggest mobile-phone maker, fell 24 percent in Helsinki trading in the first three months of the year, their biggest drop since the second quarter of 2004, on concern sales growth in developed markets such as Europe will slow. Espoo, Finland-based Nokia increased its market share to 40 percent last year by selling handsets for less than $50 and pricier models with satellite navigation.[18] Although Nokia ( News - Alert ), the world's leading mobile phone maker, posted strong first quarter results Thursday, its market share slipped and missed analyst forecasts, substantially dropping its share price. The Finnish mobile phone giant's shares had dropped 13.51 percent by the closing bell yesterday, to at 18.12 euros, their lowest level in a year, on the Helsinki stock exchange, which was down 2.10 percent on average, according to Reuters ( News - Alert ).[19] Analysts had anticipated shipments of 115 million units and an average selling price of 80 euros. Nokia's market share tops the combined share of its three closest rivals, Motorola Inc., Samsung Electronics Co. and Sony Ericsson Mobile Communications Ltd., according to researcher Strategy Analytics. Motorola, which lost its position as the second-largest maker of mobile phones last year to Samsung, plans to separate its handset business after failing to introduce a model to match the success of the Razr.[12] Analysts had anticipated shipments of 115 million units and an average selling price of 80. Nokia said the global market for mobile phones would rise 10 percent in unit terms this year and the company aims to increase its market share further.[16] Nokia said it sold more than 115 million mobile devices in the three-month period — an increase of 27 percent from 2007. The Finnish company expects the mobile phone market worldwide to grow by some 10 percent in 2008 from its 2007 estimate of 1.14 billion units, but added that the average selling price across the industry would continue to fall during the year. Nokia CEO Olli-Pekka Kallasvuo said he was pleased with the quarterly result and gave an upbeat forecast for the rest of the year.[6]

"While we will not have major new products shipping in the second quarter, we expect a number of new products to be shipping and to have a positive impact on our results in the second half of 2008," Nokia chief executive Olli-Pekka Kallasvuo said in the earnings statement. The company said its handsets on average sold for 79 euros each in the first quarter, missing analyst estimates for a price of 81 euros. Its average selling price stood at 89 euros in the first quarter of 2007 and 83 euros in the previous quarter.[2] HELSINKI, Apr. 17, 2008 (Thomson Financial delivered by Newstex) -- The average selling price of Nokia (NYSE:NOK) Oyj's handsets sold in China and Europe rose in the first quarter of the current year from the fourth quarter last year, Nokia chief executive Olli-Pekka Kallasvuo said on a conference call following the group's first-quarter results.[20]

Selling cheaper handsets in emerging markets continued to push down the closely watched average selling price of Nokia's mobile devices. It fell to $125 in the period, from $132 in the previous quarter and $141 in the first quarter last year.[1] Nokia's handsets fetched an average price of 79 euros during the quarter, down from the average selling price (ASP) of 83 euros in the fourth quarter and missing forecasts. That fall reflected its greater exposure in emerging markets and the negative impact of the dollar's drop. In a reversal of its guidance issued in January, Nokia said it now expects the mobile device market to contract in value terms this year.[21] Total shipments were up 27% compared with the same period last year, but were actually 13% lower than in the final quarter of 2007 reflecting a slowdown in some markets. Nokia's market share dipped from 40% at the end of last year to 39% although the firm said it expected this figure to rise again in the second quarter. Its average sales price also fell, on a quarter-by-quarter basis, from 83 euros to 79 euros per handset. Nokia expects mobile industry volume sales to rise 10% this year but analysts focused instead on a possible decline in sales values.[5] "However, now we expect the device market to decline in value in 2008 in euro terms." Nokia also reported that its world-wide market share declined to 39% in the first quarter from 40% in the fourth quarter, and the average sale price per unit dropped about 4.8% over the same period, as lower-priced phones accounted for a larger proportion of total sales.[17]

Nokia's first quarter sales of mobile phones increased by 27 per cent year-on-year to 115.5 million units. Other trends included lower average selling prices attributed mainly to the 'negative effects of the recently weakened U.S. dollar,' Nokia said.[22] The average selling price of phones in emerging markets is less than that of Europe and the U.S., muting overall growth. Nokia said the average sales price of its phones in the quarter fell to $125 (79 euros), down from $132 in the prior quarter and $141 in the same quarter a year ago. "It's falling, especially in developing countries, due to increased competition from other low cost producers," said Jack Gold, founder and principal of research firm J. Gold Associates. "That helped depress Nokia's overall earnings." The company also faces pressure on the high end of the market, thanks to tougher competition from Samsung, LG Electronics, BlackBerry maker Research In Motion ( RIMM ) and Apple ( AAPL ) with its iPhone.[23] The first quarter is typically the weakest by shipments. The average selling price of its phones fell to 79 euros from 83 euros sequentially, and dropped from 89 euros a year earlier on increased sales in emerging markets, Nokia said.[24]

Nokia's main market, Europe, is slowing down, and the company now gives clear evidence of that," said Carnegie analyst Janne Rantanen. The world's fourth-largest mobile phone vendor, Sony Ericsson, whose forte is its strongly branded and relatively expensive Walkman music and Cybershot camera phones, warned on January-March profits last month, citing weakening European markets. Its average selling price for phones in the first quarter also disappointed the market, falling to 79 euros from 83 euros in the previous quarter, while analysts had on average expected 81 euros.[25] "With global handset revenues coming under increasing pressure in 2008, then the high-value North American market is one Nokia simply cannot afford to ignore." Richard Windsor, who tracks the mobile comms sector at Nomura Securities (London) said he has long suspected that Nokia might miss on Average Selling Prices (ASP) but would make up the difference in volume "and we think that is how 2008 will play out." He figures the strength of the Euro will have a substantial impact on Euro based device prices, but volumes are almost able to make up the difference. Windsor said first quarter 2008 shipments of 115.5 million handsets were above Nomura's expectations which, combined with solid execution, led to profits that were ahead of his expectations but below those of the market.[3] Nokia said in a statement that the value of the global handset market measured in euros could slip in 2008, primarily as a result of the weak dollar, but also because the European economy may begin to slow. The company's average selling price for handsets also continued its downward trend, to just €80.2 ($127) in the quarter, some 10% below the figure a year earlier.[26] The dollar has lost about 15 percent against the euro in the past year, reducing revenue in euros. At constant currencies, Nokia still anticipates the global handset market will grow this year, Simonson said, calling the currency situation "crazy.'' The weaker dollar may also hurt sales and prices this quarter.[12]

In today's statement, Nokia also cited "the general economic slowdown in the U.S., and possibly going forward some economic slowdown in Europe'' for the new market forecast. Nokia reiterated the global handset market will rise 10 percent by units this year and the company aims to increase its market share.[12] Given that, Mr. Franklin of Edward Jones said, the company's full-year forecast "implies a significant slowdown in the second half." Analysts said Nokia could weather the slowdown better than many of its smaller competitors, as its world-leading market share of about 40 per cent continues to grow - largely a result of its dominance in developing markets, where economic growth remains much stronger than in major industrialized economies. A slowing global market could add to the struggles of one of Nokia's biggest competitors, U.S.-based Motorola Inc., which is set to report its own results next Thursday. Motorola's stock slipped 1.6 per cent in New York yesterday, closing at $9.05 (U.S.), after slipping below $9 earlier this week for the first time in almost five years. The stock is down 44 per cent since the start of the year, as the deteriorating industry-wide outlook has been compounded by the company's own eroding market share and questions about its management and its future.[27] Nokia's stock plunged 14% Thursday after the world's No. 1 handset maker missed first-quarter earnings views and hinted at a global slowdown in cell phone shipments. The Finland-based company expects a weaker dollar and slower economic growth in the U.S. and parts of Europe to dampen the overall handset market this year.[23] More importantly, Nokia said a combination of the weak dollar, slowing economic growth in the U.S. and a possible pullback in Europe would cause the global handset market to contract in value this year, even as it expects annual unit sales growth of 10%.[17]

The real blow was the company's outlook. Nokia said it expected a decline in the global handset market this year, in euro terms, depressed by the weak dollar and an economic slowdown in Western markets.[28] Looking ahead, Nokia said it expects the mobile-device market to decline in euro terms in 2008 compared with the previous year. The change in its outlook reflects the negative impact of a weakening U.S. dollar and the general economic slowdown in the U.S. and in Europe, the company said.[29] Nokia said it now expected the cellphone market would fall in euro terms in 2008, while the boom in emerging markets would lift shipment volumes by 10 percent from 2007. "The change from our previous estimate of value growth for this market primarily reflects the negative impact of the recently weakened U.S. dollar, the general economic slowdown in the U.S., and possibly going forward some economic slowdown in Europe," it said in a statement.[25] Nokia also pointed to weakness in the U.S. dollar as a potential problem. "The change from our previous estimate of value growth for this market primarily reflects the negative impact of the recently weakened U.S. dollar, the general economic slowdown in the U.S., and possibly going forward some economic slowdown in Europe," the company said. Neil Mawston, director of Strategy Analytics, noted that in addition to its "lackluster CDMA handset portfolio," Nokia's "weak relationships with some major operators have caused its market share in North American to collapse."[30]

HELSINKI (Thomson Financial) - Nokia (nyse: NOK - news - people ) Oyj reported a jump in pre-exceptional first-quarter earnings roughly in line with market expectations, but said it lost market share as selling prices fell and hinted that the weak dollar could dent earnings going forward. Nokia stuck with its forecast for industry growth of 10 percent in volume terms this year but warned the market would decline in value, euro terms.[21] Nokia's shares slumped 14 per cent in New York, after the Helsinki-based company reported first-quarter numbers that fell short of expectations. "But what has investors spooked is their outlook for the industry for the rest of the year," said analyst Rick Franklin of Edward Jones Co. The company reiterated its forecast that industry-wide unit sales would rise a modest 10 per cent this year, down from about 16 per cent last year and better than 20 per cent in the prior four years. It predicted that industry sales values in euro terms will actually decline for the year.[27] Last year, the company was overtaken by Samsung Electronics Co. Ltd. as the world's No. 2 handset manufacturer. Earlier this year, management caved in to pressure from activist shareholder Carl Icahn and agreed to split its handset operations off into a separate company. Citigroup analyst Jim Suva slashed his forecast for Motorola's handset sales this year to 29 million units, from 31.9 million previously - representing a slump of 32.5 per cent from its 2007 volumes. He also lowered his first-quarter earnings estimate to a loss of 8 cents a share (from 7 cents previously). Motorola has seen its long-time flagship handset offering, the RAZR, overtaken in popularity by the next generation of handheld devices, and it has been slow off the mark in introducing its own next-generation products. Mr. Suva suggested that after the deep selloff over the past few months, any bad news for this quarter is already built into the stock. "We believe investors are braced for the worst and then some," he said.[27]

"Nokia's product portfolio is superior compared to rivals, but it lacks a killer device,'' said Pasi Vaeisaenen, an analyst at Glitnir Bank in Helsinki, which advises buying the stock. Motorola, which lost its position as the second-largest maker of handsets last year, said Jan. 23 its phone sales will drop "significantly'' in the first quarter after plunging 38 percent in the preceding three months. Schaumburg, Illinois-based Motorola plans to separate its handset business after failing to introduce a successor to its best-selling Razr model.[18]

Nokia management said the second half the year should show an uptick in higher-priced phone sales when new products reach stores. For now, analyst James Kelleher of Argus Research says Nokia's paying a disproportionate price for weakness in its most developed markets and isn't getting enough credit for its successes in developing markets. "The company continues to do well at the low end in terms of pushing into growth markets," he says. "I think investors are kind of penalizing the stock for some weakness in mature markets - even though these markets plainly are in economic distress. That's without crediting Nokia for its breakaway success in the emerging world."[17]

Nokia is expected to report a 46-percent rise in first-quarter earnings per share as strong demand for handsets in emerging economies offsets softer demand for more expensive mobile phone handsets in Europe. Strong results from IBM on Wednesday and number one chipmaker Intel on Tuesday will ensure extra focus on the world's top cellphone maker later this session, a day after the European tech sector registered its largest one-day gain in two weeks. In the United States, Bank of New York Mellon and Merrill Lynch report earnings, while on the macroeconomic side, the Philadephia Federal Reserve releases its April business activity index. Crude oil reaching new peaks overnight after a drop in U.S. inventories should give the European oil and gas sector a lift, while the dollar falling to record lows against the euro could temper gains in export-sensitive sectors such as auto stocks.[31] HELSINKI, Finland (AP) - Shares in Nokia Corp. (nyse: NOK - news - people ) plunged more than 13.5 percent Thursday after the world's largest mobile phone maker downgraded its forecast for the global handset market and posted lower-than-expected earnings in the first quarter.[32] HELSINKI, Finland (AP) — Nokia reported a 25 percent jump in first-quarter earnings on new demand from emerging markets, but the world's top mobile phone maker missed expectations and gave a downbeat global forecast, sending its shares plunging.[33]

Before one-off items, Nokia's earnings per share for January-March rose to 0.38 euros from 0.26 euros in the same period of 2007, though larger-than-expected one-off costs pushed reported EPS to 0.32 euros, missing analysts' forecasts. Nokia, which has a strong lead in emerging markets including China and India, sold 115.5 million phones in the quarter, up 27 percent from a year earlier, and more than its three closest rivals combined.[11] Kallasvuo will probably report first-quarter net income rose 41 percent to 1.38 billion euros ($2.18 billion), or 35 cents a share, from 979 million euros, or 25 cents, a year earlier, according to 14 analysts' estimates compiled by Bloomberg. "They need to report at least in line, and the focus will be more on what they say about the second quarter,'' said Jyrki Uurasmaa, a fund manager at Glitnir Asset Management in Helsinki, which oversees the equivalent of $4.7 billion, including Nokia shares.[18]

Nokia's global market share in the first quarter rose to 39 percent from 36 percent a year earlier, trailing the 40 percent predicted by analysts. The company forecast its market share in the second quarter will rise sequentially.[24] Nokia sold 115.5 million devices during the first quarter, up 26.8 percent year-on-year but down 13.5 percent compared to the 133.5 million devices sold in the fourth quarter last year. The group said however that it expected its market share to increase in the second quarter compared to the first three months of the year.[2] Nokia sold 115 million mobile devices in the quarter — up 27 percent from a year earlier. Its market share grew 3 points to 39 percent year-on-year, but fell from 40 percent in the fourth quarter of 2007.[33]

The Average Selling Price of Nokia phones fell to 79 Euros down from 83 Euros and while it managed to sell more mobile phones - nearly 116 million in the last quarter - than Samsung, Motorola and Sony Ericsson put together, its market share fell from 40 percent to 39 percent.[34] Nokia's average selling price for phones in the first quarter also disappointed the market, falling to 79 euros from 83 euros in the previous quarter, while analysts had on average expected 81 euros. Shares in Nokia ended down 13.6 percent at 18.12 euros, their biggest one-day fall since April 2004, and almost single-handedly dragged the DJ Stoxx European technology sector index down 6.4 percent.[35]

Sales dropped however in North America. Nokia said the average selling price of its mobile devices in the first quarter of 2008 was 79 euros, down from 83 euros in the fourth quarter 2007 and 89 euros in first quarter 2007.[22] The company shipped 115.5 million devices in the quarter, an increase of 27 percent from a year earlier, and a decline of 13 percent sequentially. The average selling price of its phones fell to 79 euros from 83 euros the previous quarter, and from 89 euros a year earlier on increased sales in emerging markets.[12] Average selling prices for Nokia's phones dropped from 83 to 79 Euros since the most recent quarter. Nokia also makes preliminary estimates for its position in the industry and estimates that its latest sales should provide it with about 39 percent of the world's marketshare for the quarter, up three percent from early 2007 but down one percent from an all-time high 40 percent in late 2007.[36]

The profitability of handset sales weakened slightly from the stellar levels of the end of last year, but operating margin for "Devices and Services" (Nokia's Mobile Phones, Multimedia and Enterprise Solutions) was still an excellent 20.3% of net sales. This was even in the face of a decline in the average selling price (ASP) for handsets, down from EUR 83.00 in 4Q/2007 (and as much as EUR 89.00 in 1Q/2007) to EUR 79.00.[37] Nokia Corp.' s quarterly earnings report dealt a heavy blow to its stock and sent a tremor through the mobile phone industry, as the world's biggest handset maker warned that a slowing world economy and a slumping U.S. dollar will erode industry-wide sales this year.[27] Nokia clawed back some ground -- putting on 0.94 percent to 18.29 euros -- but brokers remain bearish after the group predicted the weak U.S. dollar would negatively impact the mobile phone industry's euro-based growth. JP Morgan cut its stance on the shares to 'underweight' from 'overweight' following the release of Nokia's first-quarter report on Thursday, while UBS downgraded its recommendation to 'neutral' from 'buy'. Nokia said in a filing to the stock exchange shortly after the close that it spent 64 million euros to buy back 3.5 million of its own shares during the session.[38]

Nokia (NOK) shares are headed sharply lower this morning - and dragging other handset makers along for the ride - after the company provided some sobering comments on the outlook for the mobile phone business for 2008. Nokia still sees 10% growth in handset units this year, from the roughly 1.14 billion sold in 2007.[39] April 17 (Bloomberg) -- Nokia Oyj, the world's biggest maker of mobile phones, reported first-quarter profit that missed analysts' estimates and said the value of the global handset market will shrink in euro terms this year.[24] Helsinki - Finnish-based Nokia, the world's biggest mobile phone maker, said Thursday it increased its sales and net profit for first-quarter 2008 although its share of the global handset market slipped slightly.[22]

American depositary shares of Nokia ( NOK ) tumbled 9% Thursday after the Finnish cellphone maker reported weaker-than-expected profits and warned the falling dollar is shrinking the value of the global handset market. At its lowest point, the stock plunged nearly 15%, its biggest one-day drop in four years.[17]

"North America, which despite a slowdown still accounts for 16 percent of global handset demand, remains a serious problem-child for Nokia," said Neil Mawston of Strategy Analytics. He blamed Nokia's "lackluster" portfolio of handsets using the CDMA standard that is popular in the U.S. and weak relationships with some major carriers. Kallasvuo said Nokia expects to gain market share in the second quarter even though "no major new products" are being launched, and he said he was optimistic about the rest of 2008.[1] "North America, which despite a slowdown still accounts for 16% of global handset demand, remains a serious problem-child for Nokia. It is the only major region of the world where Nokia is not number one. A lackluster CDMA handset portfolio and weak relationships with some major operators have caused its market share in North America to collapse from 20 percent in Q1 2006 to an estimated 7 percent in Q1 2008.[3]

Nokia released earnings on Apr. 17 that largely met analyst expectations, yet its shares plunged nearly 14% in Helsinki and New York trading. The reason: Nokia ( NOK ) executives turned more pessimistic about the global economy, saying the total value of the handset market, measured in euros, could slip this year.[26] NEW YORK (Fortune) -- Nokia isn't immune from the economic slowdown, but on the flip side, the company says it's not seeing the U.S. spending pullback invading Europe. The No.1 mobile phone maker's shares fell 13% in the wake of its first-quarter earnings report Thursday.[40] Even though the Finnish company said it expects the global mobile phone market to grow in volume by 10 percent in 2008, it said the market would lose value in euro terms compared with 2007 because of a weak U.S. dollar, an economic slowdown in the U.S, and possibly in Europe.[33] Nokia expects the value of the global mobile device market to be lower in euro terms in 2008 than it was in 2007, owing to a combination of weakness in the U.S. dollar and slower global economic growth.[41]

Looking ahead, Nokia continues to forecast volume growth in the market of 10% for 2008, but said it now expects the handset market value to decline over the year because of the weaker U.S. dollar and weakening economic conditions in the U.S. and, possibly, Europe.[42]

Nokia said the lower year on year ASP was due to the handset maker shipping a higher proportion of lower priced devices, and to a lesser extent the weakening U.S. dollar. It also said it was continuing to target an increase in its market share in mobile devices in 2008.[15] Average selling prices will continue to fall, it predicted. Nokias market share tops the combined share of its three closest rivals, Motorola, Samsung Electronics and Sony Ericsson Mobile Communications, according to the research firm Strategy Analytics. The 26 percent increase in unit shipments last year was helped by models such as the N95 with satellite navigation and the thin 6300 and 6500 series in the high- and mid-priced segments, and by the 1100 and 1200 series in the entry market. In emerging markets, Nokia has increased its market share after Motorola withdrew from competing on price as the strategy lead to losses last year. Nokia derives more than half of its revenue from outside Europe and North America, while China and India are its two single biggest markets.[16] Schaumburg, Illinois-based Motorola and South Korea's Samsung report earnings next week. In emerging markets, Nokia has increased its market share after Motorola withdrew from competing on price as the strategy led to losses last year. Nokia derives more than half of its revenue from outside Europe and North America, while China and India are its two single biggest markets. To stay ahead of competitors, Nokia grouped Internet services such as music, map and game downloads under the Ovi brand and agreed with Vivendi SA's Universal Music to sell phones with a year of unlimited access to millions of tracks.[24]

Note: Sponsored advertising links, if any, are in green. Nokia today posted its performance numbers for Q1 of 2008. The company estimates that its market share for the quarter dropped slightly to 39% from 40% in Q4 of last year. In Q1 of this year the company sold 115.5 million devices, which is up 27% from Q1 of 2007, but down 12% from the figures posted for the Q4 2007 shopping season, which is not a surprise.[43] The company sold 115.5 million handsets in the quarter, up 27% year over year but down 13% sequentially. Nokia estimated that its market share was 39% in the quarter, down from 40% in Q4, although up from 36% a year ago.[39]

The company saw sales of mobile phones reach 115.5 million during the quarter, a 27 percent increase from the same period last year, representing a 40 percent share of the global market.[44] Nokia last year sold nearly 440 million handsets accounting for 40 percent of all global cell phone sales.[33]

Sales of Nokia handsets in the U.S. dropped 45.8 per cent compared with the first quarter last year, while sales in Europe increased 7 per cent.[4] Sales for the quarter ended last month were 12.66 billion euros, up 28.4% from a year earlier. Those results were in line with expectations. "Nokia had strong profitability in the first quarter, with both operating profit and EPS up significantly year on year," CEO Olli-Pekka Kallasvuo said in a press release.[29] Net profit for the January-March period rose 25 percent to 1.22 billion euros (1.95 billion dollars) from the same quarter a year ago, the company said in a statement. It said sales during the quarter jumped 28 percent to 12.66 billion euros, which fell short of expectations of 12.74 billion euros, according to analysts.[2]

Nokia reported Q1 sales of 12.66 billion Euros, up 28% year over year; profits were 0.32 Euros a share, up 28% from 0.25 a year earlier.[39] Nokia Corp. posted a net profit of 1.2 billion euros ($1.9 billion) in the first three months of the year, up from 980 million euros during the same period in 2007.[33]

Nokia's revenues grew 28.4% from the same quarter last year, to €12.66 billion ($20 billion), and its operating profits rose 20% to $2.4 billion, fueled by emerging markets that are still growing despite the U.S. slowdown. Not counting special items such as the cost of closing a factory in Bochum, Germany (BusinessWeek.com, 3/11/08), operating profit rose 39%, Nokia said.[26] Net profit hit $1.95 billion in the quarter, up about 25% over the year-earlier period, while revenue was about $20 billion. The North American market continued to bedevil Nokia as the world's dominant handset supplier maintained its dominance in most of the world's markets but slipped in the United States and Canada. In announcing its first-quarter financial report Thursday, the Finland-based company said demand in emerging markets propped up its sales and earnings, but it indicated that its North American business is suffering.[30] Revenue was about $20 billion in the quarter. Nokia, which ships more handsets than its next three competitors combined, has suffered in the U.S. market from a lack of CDMA EV-DO mobile phones. It is planning to use the emerging Long Term Evolution standard to help crack the North American market.[30]

SAN FRANCISCO - Nokia, the worlds largest maker of mobile phones, on Thursday released its first quarter results with a 25 percent increase in earnings, boosted by new demand from emerging markets, but less below than the market estimates.[7] The Finnish mobile phone giant's market share in the first quarter stood at 39 percent, up from 36 percent a year ago but down from 40 percent in the fourth quarter of 2007. When the group published its annual results in January, it warned that its first quarter performance might suffer compared with the last three months of 2007.[2]

Kallasvuo countered that the rising foodstuffs bills had not thus far been taking away customers, citing the case of India, where nine million new mobile phone users are minted every month, and where the phone is now seen as something of a necessity, putting it relatively high on the list of consumers' priorities. One subject that was bound to surface in the wake of the Nokia results was the impact on sales in Germany of the calls for a boycott of its products after the announced closure of the Bochum plant. According to figures received by Helsingin Sanomat, Nokia lost about 4%-points of its market share in Germany as a result.[37] Shares in Nokia, the world's biggest mobile phone maker, plunged yesterday when it offset strong results in emerging markets with a forecast of declining sales and falling prices.[4] Market view hits Nokia stock Children ride their bicycles past a billboard near the entrance of the new Nokia plant in Jucu village near Cluj, about 450 km (280 miles) northwest of Bucharest February 11, 2008. January-March underlying earnings at Nokia Oyj, the world's biggest maker of mobile phones, rose in line with expectations, it revealed on Thursday, but its view of the market in 2008 dented its share price.[25] European shares are expected to open higher on Thursday when Finnish mobile phone maker Nokia reports earnings after upbeat results on Wall Street offered investors some relief over companies' ability to weather a slowing economy.[31]

Nokia's forecast that the euro-denominated value of handset sales would decline in 2008 caused the company's stock to go into freefall on Thursday. By the close of trading on the day that the mobile phone giant announced its first-quarter results, the stock had shed 13.6% of its value and nearly EUR 11 billion had been sliced off the market capitalisation.[37] "We've never seen it more clearly than now," Vaisanen said. Nokia saw its strongest growth in mobile phone sales in the Asia-Pacific region, which for the first time overtook Europe as the company's biggest market. It sold 34 million units in the region, accounting for more than a third of the company's mobile phone sales.[1] Nokias North America market tumbled is tumbling with a decline of 46 percent in sales to about 2.6 million mobile devices sold in the first quarter.[7] Nokia reported selling 115 million mobile devices in the first quarter, 27 percent higher than last year.[7] Nokia sold 115.5 million devices during the first quarter, up 26.8 percent year-on-year but down 13.5 percent compared to the 133.5 million devices sold in the fourth quarter last year.[19]

Europe, with 26 million units, was Nokia's second biggest market in the period, before China with 21 million units. Its troubled North American market continued to slump, with a 46 percent drop in sales to a mere 2.6 million mobile devices sold in the quarter.[33]

The lower ASP is partly due to the fact that areas of growth are found mainly in emerging and third world countries like China and Asia. Nokia managed to increase its operating margin which means that the cost of producing phones and devices actually fell more than its Average Selling price and is confident that more than 1.2 billion mobile devices will be sold by 2008.[34] The phones sold in emerging markets tend to be cheaper, pushing push down the closely watched average selling price. It fell to 79 euros ($125) in the period, from 89 euros in the same period last year and 83 euros in the previous quarter.[33] Nokia's average selling price per phone fell to $126 in the first quarter from $132 in the prior quarter. This points to a higher volume of cheaper phones and probably a sign of a price war.[40]

Analysts had anticipated shipments of 115 million units and an average selling price of 80 euros. Nokia's market share tops the combined share of its three closest rivals, Motorola Inc., Samsung Electronics Co. and Sony Ericsson Mobile Communications Ltd., according to researcher Strategy Analytics.[24] "Average selling prices may disappoint a bit, especially in Europe,'' Glitnir Asset Management's Uurasmaa said. "One issue in the first-quarter report will be how the high-end segment performed,'' said Staffan Sevon, chief investment officer at Nordea Asset Management in Helsinki, who oversees the equivalent of $231 billion, including Nokia shares.[18] The average selling price (ASP) declined from '83 in Q407 to '79, so revenues grew a more modest 13% to '9.23 bn. It showed impressive double-digit growth in all regions except the U.S. and Western Europe. In the U.S. Nokia's volumes fell both year on year and sequentially - this has been a thorn in its side for over a year now and it is running a big internal project to improve the position during 2008.[45] Much of the year's volume growth looks likely to come from emerging markets, where the focus is on cheaper, lower-end handsets. "It's a pretty disturbing situation if volumes grow by 10 per cent and lower average selling prices and a weaker dollar erase the gain in value," portfolio manager Thor Udenaes, of SEB Asset Management in Stockholm, told Bloomberg.[27]

All good? I dont think so. After Nokia announced that growth will only be 10% this year, that volume of sold handsets will fall, prices of these handsets will also fall and that the weak dollar will further lower profits, the price of Nokia shares fell 13%. Leave a comment on this post.[46]

"The fact that the dollar has declined quite dramatically and the fact that we report in euros exacerbates that," said CFO Rick Simonson during the company's conference call. Nokia said it continues to expect some drop-off in industry ASPs this year, primarily reflecting the increasing effect of the emerging markets and general competitive factors. On the positive side, Nokia reaffirmed that it expects industry mobile-device volume this year to grow approximately 10% from the roughly 1.14 billion units the company estimated for 2007. American Technology Research analyst Mark McKechnie said he is maintaining his buy rating on the stock, even after Nokia provided a disappointing contrast to strong reports from tech giants Intel INTC and IBM IBM.[29] "There's been some worrying news from suppliers.'' The stock has dropped 21 percent this year, valuing Nokia at 79.6 billion euros, compared with a 20 percent slide in the Dow Jones Europe Stoxx Technology Index. The stock had its best year since 1999 in 2007, gaining 71 percent. It rose 68 cents, or 3.4 percent, to 20.96 euros today.[18]

Nokias stock lost 24 percent in the first three months of the year on concern that sales growth in developed markets like Europe will slow.[10] Sales growth at Nokia may also have been hurt by the weaker dollar, which lost 15 percent against the euro in the past year.[18] Revenue increased 28 percent to 12.6 billion euros ($20 billion), from 9.8 billion euros a year earlier, with strong growth of handsets sales in Asia, the Middle East, Africa and Latin America.[33] The venture with Siemens AG, which started last year, aims to save 2 billion euros annually by the end of 2008 by cutting 15 percent of the workforce. "The network side is vulnerable to economic growth, while in consumer products it's a lot more about branding,'' Nordea's Sevon said. "It's about wanting one rather than needing one.''[18]

Chief executive Olli-Pekka Kallasvuo said volumes of handsets are expected to increase sequentially in the second quarter of 2008. "While we will not have major new products shipping in the second quarter, we expect a number of new products to be shipping, and to have a positive impact on our results in the second half of 2008," he added. The 26 percent increase in unit shipments last year was helped by models such as the N95 with satellite navigation and the thin 6300 and 6500 series in the high- and mid-priced segments, and by the 1100 and 1200 series in the entry market.[44] "The outlook for June suggests a lull in new products with more impact in the second half of 2008." As the company does not expect to introduce new products during the second quarter, Kallasvuo said Nokia's ability to respond to the market and customer needs will help the company maintain and grow its share in Europe.[29] While we will not have major new products shipping in the second quarter, we expect a number of new products to be shipping and to have a positive impact on our results in the second half of 2008." Nokia said its net profit hit $1.95 billion in the quarter -- up about 25% over the year-earlier period.[30]

NORWOOD, Mass. (AP) - Aspect Medical Systems Inc. (nasdaq: ASPM - news - people ), which makes anesthesia monitoring systems, said Thursday it swung to a loss in the first quarter, as expenses outpaced revenue growth. WASHINGTON (AP) - Marriott International Inc. (nyse: MAR - news - people ) said Thursday its first-quarter profit dropped 34 percent as the slowing U.S. economy took a toll on its hotels. The results were in line with Wall Street expectations, but the hotel operator lowered its forecast for the full year. NEW YORK (AP) - Pfizer Inc. (nyse: PFE - news - people ), the world's biggest drugmaker, reported an 18 percent drop Thursday in its first-quarter profit on tougher generic competition but said it still expects to meet profit expectations for the full-year.[32] To highlight two major ones, Nokia had to shell out €217 million due to Finnish pension liabilities and another €81 million as a result of the Bochum site closure. With regards to both core and ancillary business earnings however, profits were up significantly between Q1 2007 and Q1 2008. "Nokia had strong profitability in the first quarter, with both operating profit and EPS up significantly year on year.[46] Nokia (NYSE: NOK) released first quarter 2008 results today, and while it posted a profit, the handset giant missed analyst estimates, hit by both pension costs, and the closing of its plant in Bochum, Germany.[15]

Nokia estimated that it had a 39 per cent share of the global handset in the first quarter while it was on 40 per cent in fourth- quarter 2007.[22] The group estimated it would grow in second quarter 2008. In its outlook for the second quarter, Nokia repeated its earlier estimate that the global handset market in 2008 was expected to grow 10 per cent.[22]

Nokia estimated that industry-wide sales volumes were up 17 per cent year over year in the first quarter.[27] Market research firm Strategy Analytics estimates Nokia's market share in the U.S. was only 7% in the first quarter, down from 20% two years earlier.[26] April 18 (Bloomberg) -- Nokia Oyj's market share in Germany slipped in the first quarter after the company decided to close a factory in the country, prompting protests, Helsingin Sanomat reported, citing phone operators.[47]

The Helsinki-based company reported a profit of 32 euro cents (51 cents) a share for the first quarter, up 25% from 25 euro cents (40 cents) a share a year ago.[17] World No. 5 handset maker LG Electronics of South Korea on Wednesday said record mobile phone sales helped the company swing to a profit in the first quarter.[33] Shares in the biggest maker of mobiles fell nearly 10 percent after it reported expected first quarter profits.[10]

Nokia's overall share of handset shipments slipped to 39% in the first quarter from 40% a quarter earlier. "Nokia is still in a strong position in this segment, but we should expect to see gradual erosion of its share over the coming years" as a 3G-capable version of the iPhone launches and other companies beef up their offerings, Garner said.[23] "The overall device market developed as expected, with the greatest demand in emerging markets where our position is very strong," Nokia CEO Olli-Pekka Kallasvuo said. He said Nokia expects to gain market share in the second quarter.[33] Olli-Pekka Kallasvuo believes the effects will be of short duration, and that the situation will normalise as the year goes on. The news of the decline in market share is quite dramatic, given that Germany is one of those countries where consumers get a phone as a "free add-on" with a mobile subscription. This means in effect that consumers have had to specifically reject a Nokia phone and demand from operators such as Deutsche Telekom or Vodaphone another brand in its stead.[37] Kallasvuo was equally sanguine about the news that Nokia's handset market share had slipped from 40% in late 2007 to 39%. He put it down to normal seasonal fluctuations: companies strong in the European market prosper over the Christmas season, while those strong in Asia benefit from the string of celebrations in that part of the world in the early part of the year.[37]

Nokias lifted its market share to 40 percent last year by selling handsets for less than $50 and pricier models with satellite navigation at the expense of rivals including Motorola.[10] About half of Nokia's revenue is in dollars or in currencies closely tracking it, a regulatory filing shows. The 26 percent increase in unit shipments last year was helped by models such as the N95 with satellite navigation and the thin 6300 in the high- and mid-priced segments, and by the 1100 and 1200 series in the entry market. Nokia's market share tops the combined share of its three closest rivals, Motorola Inc., Samsung Electronics Co. and Sony Ericsson, according to researcher Strategy Analytics.[18]

Nokia's share of the handset market in Germany fell "temporarily' to about 35 percent in February from almost 40 percent at the end of last year, the Helsinki-based newspaper said.[47]

Nokia shares fell 6.6 percent in Helsinki trading after it said net income rose to 1.22 billion, or $1.95 billion, from 979 million a year earlier.[16] In afternoon trading, the shares were at 19.58, down 6.6 percent, or 1.38. The shares are off 26 percent this year, valuing Nokia at 74.3 billion.[16]

Earnings per share excluding one-time items gained to 38 cents from 26 cents a year earlier, beating the 37 cents predicted by analysts. Nokia will close its Bochum factory by the end of June and transfer most of the production to its new plant in Romania, where costs are lower. Nokia agreed on a 200 million package with unions this month to help the 2,300 German workers facing unemployment.[16] Nokia booked a net 152 million euros in pension liability transfer costs, 81 million euros to close a German plant and 100 million euros for job cuts at Nokia Siemens Networks. The company plans to book more costs at the network venture this quarter. The Finnish company will close its Bochum, Germany, factory by the end of June and transfer most of the production to its new plant in Romania, where costs are lower. Nokia agreed on a 200 million-euro package with unions this month to help the 2,300 German workers facing unemployment.[12]

Part of it was attributable to the falling value of the U.S. dollar, which has affected markets globally. According to Nokia, NSN is still facing increased pricing competition in the infrastructure market as vendors slash their prices to win new contracts, particularly in developing markets. Its operating margins went negative, to -2.2%, and it recorded an operating loss of 74 million Euros ($118 million). [48] Nokia Siemens Networks, Nokia's joint telecom gear making venture with Siemens, reported a smaller-than-expected 74 million euro loss, but Nokia said it now expected to see no growth in the telecom gear market in 2008. "The change from the previous estimate of 'very slight growth' for this market primarily reflects the negative impact of the recently weakened U.S. dollar," the company said in a statement.[11] "With global handset revenues coming under increasing pressure in 2008, then the high-value North American market is one Nokia simply cannot afford to ignore," said Neil Mawston, director at research firm Strategy Analytics. "The change from the previous estimate of 'very slight growth' for this market primarily reflects the negative impact of the recently weakened U.S. dollar," the company said in a statement.[25]

"You pay a price for being a global company if the world is in distress, as GE ( GE ) learned the other day." If its high-end devices do well when they reach more prosperous European and North American markets, Nokia's new products will help carry the company past a spending slowdown. Right now, Faucette says it's not clear if higher-income phone buyers are simply spending less or waiting for products they want to buy. "It probably increases the importance of the new product launches they have scheduled for the second half of the year to be successful," he says.[17] Nokia said it continues to expect declining prices in 2008, "reflecting the increasing impact of the emerging market and competitive factors in general." The company also said it expects the market for mobile and and fixed infrastructure and related services to be flat this year; previously they had expected very slight growth.[39] "Many companies in our industry and some who have exited the market have struggled because of lack of scale," Kallasvuo said. "We expect this to continue, and we continue to expect to benefit from our scale." Investors are understandably twitchy at any signs of slowing consumer purchasing, but more than 1 billion handsets still are likely to fly off the shelves this year. If any company looks to benefit from that business, it's Nokia.[26] Net sales grew to EUR 12.7 billion, and net profit was EUR 1.2 billion. It was the change of tune on forward sales prospects that did the damage. As recently as January of this year, Nokia was anticipating that the value of the handset market would increase in 2008.[37] About half of Nokia's ( NOK ) sales are in dollars or currencies tied to it; a weaker dollar makes imports more expensive. "What spooked us was its outlook for the industry in general," said Rick Franklin, equities analyst at Edward Jones. Nokia reiterated projections that the industry shipments of handsets will grow 10% this year over last.[23]

Most of Nokia's new models, including the N96, will not be available before the third quarter. The company has also promised to introduce handsets with a touch-screen user interface this year to take on Apple Inc.' s iPhone.[18] The average price for a Nokia handset was probably 80 euros, down from 83 euros the quarter before and 89 euros a year earlier, the survey showed.[18] Group gross and operating margins improved by more than five percentage points each. Even more impressive: All of this was achieved as Nokia's average selling price fell to 79 euro from 89 euro in last year's Q1. (And 83 euro in Q4.) Too bad this pleasant past can't also be prologue.[49] Average selling prices in the quarter dropped to 79 Euros, from 83 Euros in Q4 and 89 Euros a year ago.[39] Average selling price (ASP) in the first quarter 2008 was Euro 79, down from Euro 89 in the first quarter 2007 and down from Euro 83 in the fourth quarter 2007.[44] The average selling price declined from 83 euros ($132) in the fourth quarter to 79 euros ($126).[42]

The results came in below analysts expectations, and Nokia's share price fell more than 6 percent to 19.59 euros ($31.20) in Helsinki.[6] Nokia reported a net profit of $1.9 billion in the first three months of the year, 25 percent more than $1.6 billion in the same period in 2007 but below analyst forecasts.[1] The net profit for the January-March period rose 25 percent to $1.95 billion dollars from the same quarter a year ago, according to a company statement.[19]

The mobile phone giant posted a net profit of 1.2 billion eEuros ($1.9 billion) in the first three months of the year, higher than 980 million eEuros during the same period in 2007.[7] While no year-over-year comparison was available since the venture formed in the second quarter, NSN saw a sizable fall-off in sales from the fourth quarter to the first, from 4.6 billion Euros to 3.4 billion Euros (US $5.4 billion), a 26% decline.[48] Sales at Nokia Siemens Networks are seen at 3.49 billion euros for the quarter, the survey of analysts shows.[18] Nokia Siemens Networks, the venture with Siemens AG, had an operating loss of 74 million euros on sales of 3.4 billion euros. That compares with fourth-quarter operating profit of 78 million euros and revenue of 4.58 billion euros.[24] Net sales increased 28 per cent to 12.6 billion euros (19.9 billion dollars), the group said while net profit was 1.2 billion euros, up 25 per cent on the corresponding business period 2007.[22] Pretax profit came in at 1.607 billion, up from 1.325 billion, on sales up 28 percent at 12.660 billion euros.[21]

Market forecasts had centred on sales of 12.74 billion euros. It expects to recoup market share in the current quarter.[21]

Nokia says it has hit bottom in the U.S. market. Shipments fell by nearly half from year-ago levels in the United States as the company stopped selling its own phones to Verizon and Sprint. Nokia has outsourced those so-called CDMA phones to another manufacturer and expects to start seeing increased sales to those companies in the second quarter.[40] CFO Simonson told Finnish TV station MTV3 that U.S. mobile operator Verizon (nyse: VZ - news - people ) Wireless will start selling customised Nokia CDMA phones in the second quarter.[11]

In October, the company offered $8.1 billion for the U.S. digital mapmaker Navteq. That deal is currently under review by European Union competition authorities. Apart from traditional rivals such as Samsung and Motorola, Nokia phones also compete with Research In Motions BlackBerry devices and Apples iPhones in the market for advanced mobile devices.[16] The company said it expects the mobile device market to decline in value in Euro terms in 2008 compared to 2007. That's new: Nokia previously had expected market expansion.[39]

Nokia meanwhile reiterated that it expected industry mobile device volumes to grow by around 10 percent in 2008 from the approximately 1.14 billion units it estimates were sold last year.[2] "The major disappointment is the ASP," said Robert Jakobsen at Jyske Bank. Nokia, which has a strong lead in emerging markets including China and India, sold 115.5 million phones in the quarter, up 27 percent from a year earlier, and more than its three closest rivals combined.[25] The tally points to a total of 295 million phones sold by all companies in the first three months of 2008 and represents a 17 percent climb over the year before, suggesting that Nokia is ahead of the market but also that the market as a whole will grow significantly for the year.[36]

The Finnish handset maker says it sold approximately 115.5 million phones during the quarter, or 27 percent more than it sold in the same quarter a year before.[36] Year on year, market share was down 45.8 percent with 2.1 million units sold, while quarter on quarter, it was down 49 percent.[15] Shipments were up 27% from a year ago, but were 13% lower than the previous quarter, dropping Nokia's market share to 39% from 40%.[29] "The competitiveness of our product portfolio is reflected in our market share and we target market share gains in the second quarter." He said that Nokia would have "no major new products" in the second quarter.[6] Nokia CEO Olli Pekka Kallasvuo described the results as strong and said Nokia is targeting market share gains in the second quarter.[42] Kallasvuo forecasted an increase in Nokias market share in the second quarter.[7]

Nokia's global market share also slipped, to 39.8% from a record 40.6% in the previous quarter, according to Strategy Analytics. That slight fluctuation concerns Nokia watchers less because the company remains dominant in most of the world and its share is still greater than that of its next three rivals--( Samsung, Motorola, and LG Electronics )--combined.[26] The Nokia financial report also stated that it expected the company's market share figures to go up once again in the current quarter, though it did not suggest by how much.[43]

Updated from 8:52 a.m. EDT Nokia NOK exceeded Wall Street's first-quarter earnings targets, but its stock was hit Thursday by shrinking market share and a warning about the expected impact of an economic slowdown.[29] Short-term investors seeking total visibility should probably disconnect. Currency issues are showing the flip side of global reach, and materials and labor costs are eating into its margin, but Nokia's also the first of the big handset makers to report earnings, and it may be paying the price for being in front of a secular slip for the industry. "The long-term trend is that stock will recover, but I don't think it will recover rapidly to its past levels until there are signs that this economic distress is abating," says Kelleher.[17] Nokia declined to comment on the earnings before the release, spokesman Brett Young said. Chief Financial Officer Richard Simonson said again last month the handset market will expand 10 percent this year, sending Nokia's stock 8.2 percent higher. Demand in Brazil, Russia, India and China continues to increase, he said.[18]

Time and time again I've heard Kallasvuo say that the U.S. market is important to Nokia, and it is doing everything it can to regain share here. At CES, I was told that Nokia is going to release 10 to 12 U.S.-specific handsets this year.[50] Neil Mawston, director of Strategy Analytics, said that that Nokia's North American market share has plunged from 20% to 7% in the last two years. The world's number one supplier of handsets ( with 40% of the world market ) has just 7% presence in the U.S., the biggest market of them all.[50] Mawston added that Nokia's North American market share has plunged from 20% to 7% in two years. Nokia, whose worldwide handset market share has hovered around 40% in recent months, expects to increase its market share during 2008.[30] Nokia expects the market share figure to climb once more in the course of the current year. It has been feared that the recession looming in the U.S. will be reflected in lower consumer demand on this side of the Atlantic.[37]

Emerging markets, including Latin America, Asia-Pacific, and especially China drove Nokia's year on year market share increase.[15]

At the end of last year, Nokia enjoyed a 40% share of Germany's handset market.[37] Nokia announced its quarterly report for Q1 2008, missing analysts''' profit expectations and predicting an overall slowing of the worldwide handset market. Before 1-time charges, the world'''s largest handset maker said its earnings per share rose, as expected, to 61 cents from 41 cents year-over-year.[8] The world's top mobile device maker said January to March diluted earnings per share, before one-off items, rose to 0.38 euros, from 0.26 euros a year ago.[21] Before one-off items, Nokia's earnings per share for January-March rose, as expected, to 0.38 euros from 0.26 euros in the same period of 2007, though larger-than-expected one-off costs pushed reported EPS to 0.32 euros, missing analysts' forecasts.[25]

With investors already nervous about economic growth and stock markets skittish around the world, Nokia's mildly pessimistic outlook was enough to wallop shares in the Finnish giant. That, despite first-quarter results that Martin Garner, analyst at market watcher Ovum ( INF.L ), called "very healthy."[26] Nokia also suggested that the U.S. economic slowdown, as well as anticipated slower growth in Europe, could hurt sales and pricing power.[27] Executives revised 2008 projections to show a decline in the overall value of the mobile market in euro terms. The change from our previous estimate of value growth for this market primarily reflects the negative impact of the recently weakened U.S. dollar, the general economic slowdown in the U.S., and possibly going forward some economic slowdown in Europe.[49] The Finnish mobile phone giant said it expected the global mobile phone market to grow in volume by 10 percent in 2008 and predicted the market would lose value in euro terms compared with 2007, due to a weak U.S. dollar and a slow U.S. economy.[7]

The company said it expects the mobile and fixed infrastructure and related services market to be flat in Euro terms in 2008, compared to 2007. "The change from the previous estimate of "very slight growth" for this market primarily reflects the negative impact of the recently weakened U.S. dollar."[44] The company's President and CEO Olli-Pekka Kallasvuo commented that the forecasting turnaround was a product of the falling U.S. dollar and slower economic growth in the U.S. and parts of Europe.[37]

The increase is seemingly modest relative to actual unit growth. This is compensated in volume by "very strong" sales in developing-world countries such as China and India, according to Nokia chief Olli-Pekka Kallasvuo. The company has regularly targeted these regions with very low-cost phones such as the 1680 classic with expectations of selling to a larger population base.[36] Nokia said the figures were boosted by 40 percent growth in Asia and 63 percent in Latin America, but sales in North America fell 46 percent to 2.6 million phones, despite management's efforts to drive sales in the region.[11]

Rick Simonson, chief financial officer, said on the call that 50 per cent of Nokia's sales were in dollars or dollar-linked. "There is growth in this market in volume and value if you knock out this crazy currency," he said.[3]

The average sales price per phone for Nokia was ''79, down from ''83 in the previous quarter.[14] Analysts were also disappointed that the average sales price per phone, or ASP, fell to 79 euros from the 83 euro level in the fourth quarter.[29]

The company said it lost market share, saw a drop in the average phone price and warned that the value of the market - as measured in Euros - fell due to the weak dollar.[40] The company's market share for smart phones in the quarter fell to 43.8% from 46.9% in the fourth quarter.[29] The Finnish firm shipped 115.5 million phones in the quarter, up 27% year-on-year, giving it a market share of 39%.[13]

Nokia said it had lost one percentage point of market share since the fourth quarter of 2007, down to 39%.[28]

A closer look at Nokia's prospects suggests the share price decline is overblown. With Motorola's ( MOT ) handset division in crisis, Nokia finally has a chance to gain ground in the U.S. And none of its competitors in the rest of the world have anywhere near the same resources as Nokia to invest in development of highly profitable smartphones and new Internet-related businesses.[26] The Nokia share price dropped some 10 per cent early afternoon after the report was released.[22]

Nokia predicts overall industry device volumes of 295 million units, up 17 per cent year on year.[4] Nokia shipped 115.5 million devices in the quarter, an increase of 27 percent from a year earlier, and a decline of 13 percent sequentially.[16] Kallasvuo also managed to raise Nokias gross margin to 34.9 percent in 2007 from 32.5 percent the year before. To stay ahead of competitors, Nokia grouped Internet services such as music, map and game downloads under the Ovi brand and agreed with Vivendis Universal Music to sell phones with a year of unlimited access to millions of tracks.[16] Nokia shipped 115.5 million phones, which is slightly above the normal seasonality and trend figure, giving growth of 27% over the year.[42] The purchase is currently under review by European Union competition authorities. Nokia also forecast global networks industry growth will be "flat'' this year in euro terms, down from an earlier prediction of "very slight'' growth.[24] In Western Europe Nokia grew volumes by 7.5% over the year. The best growth overall was in Latin America (63% y-o-y) and the best pick up in this quarter's results was in China, where Nokia had slipped slightly.[45]

"The target is to take markets in a very meaningful way in Europe during." Nokia also said its smart-phone sales fell to 14.6 million units in the first quarter from 18.8 million units in the last quarter.[29] Nokia Siemens Networks, on the other hand, are still struggling, and the unit showed a first quarter operating loss of some EUR 74 million. Kallasvuo was nevertheless relatively upbeat about the network side of the business, given the fact that the company is still only in its infancy and much energy has had to go into fusing the two large organisations.[37] Nokia sold just 2.6 million units in the first quarter in North America, down 46%.[26]

Revenue may have jumped 30 percent to 12.8 billion euros in the first quarter and unit shipments 26 percent to 115 million.[18] Sales during the quarter rose 28 percent to 12.66 billion euros, which fell short of expectations of 12.74 billion euros, according to Reuters.[19]

The Finnish mobile-phone giant posted earnings for the quarter of 1.22 billion euros, or 32 euro cents a share, an increase of 24.8% over the year-ago quarter.[29] Excluding one-time items related to pension liabilities and restructuring charges, Nokia said it earned 38 euro cents a share, 2 cents better than expectations.[29] Shares in Nokia were down 9.6%, to 18.94 euros ($30.10), on Thursday afternoon in Helsinki.[28] The weaker-than-expected profits, paired with a gloomy outlook for 2008, sent shares down 10 percent to 18.86 euros ($30.04).[33] Nokia has posted strong first-quarter results. It said net profit rose 25% to 1.22bn euros ($1.9bn) on revenue up 28% at 12.7bn euros ($20.2bn).[42]

Here is today's list of the worst stocks in the world. We begin with Nokia, which reported solid but lower-than-expected revenue and profit in its first quarter.[51] Mighty handset-maker Nokia delivered a shock to the stock market on Thursday, tumbling nearly 10.0% after it reported disappointing first-quarter profits at lunch time, and warned of a slowdown in the global handset market.[28] "North America, which despite a slowdown still accounts for 16 percent of global handset demand, remains a serious problem-child for Nokia," said Neil Mawston of Strategy Analytics.[33]

Sony Ericsson's comments came hard on the heels of a warning by chipmaker Texas Instruments (nyse: TXN - news - people ) of weaker demand for chips for high-end 3G phones, raising fears that the global economic slowdown was starting to crimp the handset industry.[11]

Nokia said the more pessimistic view "reflects the negative impact of the recently weakened U.S. dollar, the general economic slowdown in the U.S., and possibly going forward some economic slowdown in Europe."[39] 'The change from our previous estimate. primarily reflects the negative impact of the recently weakened U.S. dollar, the general economic slowdown in the U.S., and possibly going forward some economic slowdown in Europe,' the company said.[21]

"The possibility for some economic slowdown in Europe going forward is what we have been afraid of," Janne Rantanen, an analyst at Carnegie, said in reaction to the results. "Nokia's main market - Europe - is slowing down and the company now gives clear evidence of that," he added.[5] To cap it off, Nokia ( NOK ) said it remains cautious about the spread of the U.S. economic slowdown to Europe.[40] "People are worried about the economic slowdown hitting handsets sales," says Charter Equity Research analyst Ed Snyder. "There was a little indication of that, especially in the U.S. and Europe, but it's more concern than reality at this point."[40]

On a conference call with analysts Thursday, CFO Rick Simonson said Nokia was "less affected than others," by the declining consumer spending in the United States, but added that the company is keeping a "heads up for a possible slowdown in Europe."[40]

"I believe that Nokia is still the strongest manufacturer," Hannu Rauhala, an analyst with Pohjola Bank, told Forbes.com. He said that the company's underlying profitability was "extremely good." Despite a drop in average selling prices, Nokia (nyse: NOK - news - people ) managed to beef up its quarterly operating margin to 14.7%, from 13.6%, excluding one-off items.[28] "Average selling prices are falling and the question is what will happen to volumes in the future,'' said Jari Honko, an analyst at eQ Bank in Helsinki who rates Nokia "accumulate.''[24] "Average selling prices are falling and the question is what will happen to volumes in the future," said Jari Honko, an analyst at eQ Bank in Helsinki. The forecast "is the negative news of the day," he added.[52]

The company reported underlying first-quarter profit rose as expected, but a bigger-than-expected fall in its average selling price for phones also weighed on the stock.[25] Roughly one billion phones were sold in 2007. By contrast, relative newcomer Apple has sold roughly four million iPhones between the device's launch in mid-2007 and the start of 2008, though its high selling price and limited availability are believed to have a major impact on the American company's reach.[36]

Nokia sold 115.5 million phones in the quarter, a number in line with what Gartner analyst Carolina Milanesi expected.[14] Nokia shipped 14.6 million high-end phones in the quarter, up 24%, compared with market growth of 42%.[23]

Nokia doesn't expect to have any enticing new phones to offer until the third quarter, so all that flexibility will have to be spent on pushing a relatively stale product lineup at a potentially thriftier consumer.[40] While Nokia won't ship any major new products in the second quarter, Kallasvuo said several big product launches planned for the second half should boost results. "That product lag has people scratching their heads," McKechnie said. "We'll need to see something soon if they want to be well-positioned for the second half."[23] The market leader, which continues to expect industry-wide ASPs to fall, said the next batch of big handset releases would not hit the shelves until the second half of 2008. 'We expect a number of new products to be shipping' and these 'to have a positive impact on our results, in the second half of 2008,' Nokia said.[21]

Why am I even thinking of doing it? Troubling comments from the CEO. Nokia chief Olli-Pekka Kallasvuo, when asked this morning on CNBC about the threat of Apple (Nasdaq: AAPL ) cannibalizing Nokia's share with the iPhone, brushed aside the question by referring to the iconic device as a "niche product."[49] Despite the fact that Nokia is building a touch-enabled device that looks eerily similar to you-know-what, Nokia CEO Olli-Pekka Kallasvuo called the iPhone a "niche" product.[50]

Talk abut mixed messages. If the iPhone is a niche product, then why is Nokia building such a similar device ? It just doesn't add up. Kallasvuo's statement boiled MacDailyNews' blood a bit. It wrote : Kallasvuo is either incapable of applying the lessons of iPod to iPhone and understanding what's coming his way or, much more likely, he understands perfectly and, since he has no answer, is saying just what many now-defunct (if they aren't making iPod accessories) MP3-makers said a few years ago.[50]

How many "niche" products have $100 million venture capital funds ready and waiting, exactly? Candybars and way-too-late, fake 1st generation iPhones with craptastic UI's aren't going to cut it from here on out, Nokia boy. This June, the bloodbath really begins, and Kallasvuo sounds like he knows it.[50]

For the quarter that ended March 31, Nokia earned $1.9 billion (1.2 euros), up 25% from the same quarter last year but short of an expected $2.3 billion.[23] Nokia Thursday reported net income of ''1.22 billion, missing analysts' expectations of ''1.39 billion for the first quarter.[14] Without a popular smart phone, the application strength will be squandered. Nokia promised to use its "flexibility" in Europe to win back the 1 percentage point of marketshare it lost in the first quarter. The flexibility is a range of levers like marketing, pricing, telco negotiations, supplier squeezing and distribution that a dominant player has at its disposal.[40] The position in the mobile infrastructure joint venture Nokia Siemens Networks was less good in the first quarter.[44]

HELSINKI, Finland (AP) — The world's biggest mobile phone Nokia Corp. on Thursday said its first-quarter earnings rose 25 percent on demand for cheaper phones in emerging markets.[6] A model displays new Nokia mobile phone sets during a launching ceremony in Jakarta, 2007.[7] The situation has "normalized quickly,'' the newspaper quoted Deutsche Telekom AG as saying. Nokia, the world's biggest maker of mobile phones, will close its plant in Bochum by the end of June, a move that affects as many as 2,300 people.[47]

The dollar's decline and slower U.S. and European economic growth will reduce the value of the mobile phone market in 2008, chief financial officer Richard Simonson said.[52]

"At the high end, where Nokia has previously enjoyed a roughly 50% market share, we saw slower growth," Martin Garner, mobile director at research firm Ovum, wrote in a report.[23] Let's be clear about what happened yesterday. Nokia told the mobile telecoms industry: 'it's time to wake up'. The resulting damage to Nokia's share price was the market whacking its alarm clock onto the floor, because it hates the sound of the ringing bell.[41]

Nokia Chief Executive Officer Olli-Pekka Kallasvuo, responding to an analyst's question on a conference call, said the possibility that food prices could hurt handset sales is "pretty remote.[26] Quite interestingly, the biggest sales region for Nokia was Asia Pacific where 34.1 million handsets were sold, up 40% from Q1 2007! On the flip side of the coin, sales in the U.S. continue to falter, dropping to 2.6 million handsets sold (almost a 50% decline from Q1 2007).[46] Last year, Nokia sold nearly 440 million handsets. It employs 116,000 people worldwide.[1]

Handset shipments hit 115.5 million in the quarter, Nokia said, matching expectations.[29]

Revenue increased 28 percent to 12.66 billion, trailing the 12.75 billion analysts had predicted. Nokia booked a net 152 million in charges from pension liability transfers, 81 million from closing its plant in Bochum, Germany, and 100 million for cutting jobs at Nokia Siemens Networks.[16] Nokia reiterated it will achieve 2 billion euros in cost savings annually by the end of 2008 by cutting 15 percent of the venture's workforce.[24] Net income rose 25 percent to 1.22 billion euros ($1.95 billion), missing the 1.38 billion-euro average of 14 analyst estimates compiled by Bloomberg.[24] The handset-maker reported a 24.8% gain in first-quarter profit, up to 1.2 billion euros ($1.9 billion), while analysts had hoped for a figure closer to 1.4 billion euros ($2.2 billion).[28]

In all, NSN hopes to create 2 billion Euros ($3.1 billion) in savings from the combination of the two network powerhouses. Its target for achieving those synergies is the end of the year, but until then, restructuring costs continue to weigh on the joint venture.[48]

Net income rose to Euros 1.22 billion ($1.95 billion), from Euros 979 million a year earlier, an increase of 25 percent.[44]

The company shipped 115.5 million devices in the quarter, an increase of 27 percent from a year earlier, and a decline of 13 percent sequentially.[24] Global market share did slip from Q4 2007 to Q1 2008 however, dropping 1% to 39%. A total of 115.5 million devices were shipped in Q1 of this year and 14.6 million of them were S60 smartphones.[46] Cisco shares are down 12% for the year on concerns that global reach doesn't provide enough distance from the drag of the U.S. spending slump.[40]

In the first quarter, though, global shipments rose 17%, suggesting a slowdown in the remainder of the year.[23]

Nokia enjoyed robust sales in the first three months of the year, particularly in emerging markets in Asia and Latin America.[5] Nokia's other line of business, Nokia Siemens Networks, posted an operating loss of $117 million (74 million euros) on sales of $5.4 billion (3.4 billion euros).[23] Nokia also reported net sales of ''12.7 billion, up 28 percent year-on-year.[14] Sales of the devices and services group were up by 13 percent to Euros 9.3 billion, while sales at the networks division reached Euros 3.4 billion.[44]

Last month, Nokia's shares were also badly impacted following Texas Instruments' comments on 3G order cancellations and Sony Ericsson's recent warning on handset sales. [3] Nokia's year-on-year change in the volume of handset sales in Europe was up by just 7.5%, compared with sizeable double-digit increases noted in all other geographical areas except North America.[37]

The broader OMX Helsinki, which had been dragged sharply lower Thursday by handset maker Nokia (nyse: NOK - news - people ) Oyj's 14 percent slump, rose 1.06 percent to 9,446.89.[38] TietoEnator's management has refused to comment on the speculation. Other gainers included stainless steel stock Outokumpu Oyj, which firmed 2.54 percent to 31.48 euros, and paper and board maker Stora Enso (nyse: SEO - news - people ), which moved 3.17 percent higher at 7.81 euros.[38]

Last year was the best for the stock since 1999, with a 71 percent gain. "All forms of uncertainties are being punished harshly in this market,'' said Jan Ihrfelt, an analyst at Swedbank in Stockholm.[24] For all of Nokia's challenges, analysts remain upbeat about the company's prospects. "Nokia continues to demonstrate it is the dominant leader in this industry," said Franklin of Edward Jones, which rates the stock a buy.[23]

Nokia's exposure to a downturn in U.S. consumer spending is relatively low, and yet the company still expects to feel the pinch there. About: This article is an extract taken from Ovum's EuroView Daily Comment service. Providing our expert's views and opinion of the important news and events in European IT & Telecoms, this daily email bulletin is a component of Ovum's EuroView advisory service.[41] The strong Euro and the sluggishness of the U.S. and European countries means that Nokia is bracing itself for a harder than expected 2008 as the value of the market is declining in terms of Euros.[34] The 50-50 joint venture Nokia Siemens Networks - launched a year ago between Nokia and Germany's Siemens - posted an operating loss of 74 million euros for the first-quarter.[22] If you focus solely on Nokia's devices group and exclude the Group Common Functions and the Nokia Siemens Networks group, Nokia's profits were 1883MM Euros, which is up a full 50% from the operating profits for the various device groups in Q1 2007.[43] Operating profit at the company's devices and services business rose 50% over the year from 1.25bn euros to 1.88bn euros, giving an operating margin of 20.3%, up from 15.3%.[42] As a whole, the company posted profits 1531MM Euros, which is an increase of 20% versus the previous year's Q1 figures.[43]

Net profits came in below market expectations at €1.22 billion (£980 million) for the first three months of the year, compared with €979 million for the same period in 2007.[4] The slip in profits came from one-off items, including an 81-million euro ($128.7 million) charge relating to the closure of a German plant. Excluding these items, earnings-per-share came in at 38 euro cents (60 cents), in line with expectations.[28]

Analysts expected a profit of 57 U.S. cents a share, according to Thomson Financial.[17] Earnings per share excluding one-time items gained to 38 cents from 26 cents a year earlier, beating the 37 cents predicted by analysts.[24] I am beginning to despair that Nokia will never understand the U.S. market. As its recently revealed quarterly earnings tell us, its share of the market here dropped yet again.[50] Maybe it's time for me to sell my Nokia (NYSE: NOK ) shares. No, not because of its first-quarter earnings report.[49]

In Nokia's earnings call today, CEO Olli-Pekka Kallasvuo summed up the first 12 months of Nokia's networks joint venture with Siemens in one statement: 'Overall progress has been difficult but steady,' he said.[48] "The overall device market developed as expected, with the greatest demand in emerging markets where our position is very strong," Nokia chief executive Olli-Pekka Kallasvuo said in a conference call.[23] Nokia's Kallasvuo said Nokia "continues to expect some decline in industry (selling prices) in 2008, primarily reflecting the increasing impact of the emerging markets and competitive factors in general."[23]

Given LTE's position as the next step on GSM operators' evolutionary path, it is NSN's largest potential market in 4G. Nokia officials in North America said that despite the focus on LTE, WiMAX is still a large part of its strategy, and the U.S. Xohm deployments are continuing as scheduled. Simonson and Kallasvuo, however, emphasized that the global take up of LTE could be the trend that could get the infrastructure industry out of its relative slump.[48] "With global handset revenues coming under increasing pressure in 2008, then the high-value North American market is one Nokia simply cannot afford to ignore," said Neil Mawston, director at research firm Strategy Analytics.[11]

The weakened dollar was also to be seen in Nokia's net sales, since around half of the company's sales revenue comes in dollars.[37] All things considered, Nokia's net sales were up 28% (35% at constant currency) to a cool €12.7 billion and operating margin was up 0.8%.[46] According to Nystrom, Nokia's presence in emerging markets gave it a better position going forward. "One must be clear that emerging markets does not only mean cheap phones," he said, and pointed to strong Asian sales of Nokia's high-end N-Series.[28] Some analysts even fear that soaring food prices could hurt sales in fast-growing emerging markets where low-income customers may have to choose between rice and mobile communication.[26] "The mobile phone is a necessity item,'' Kallasvuo said on a conference call today, responding to whether higher food prices would affect sales.[12]

When you think hard about it, what's to debate? Nokia's assessment of the outlook for mobile phone revenues is an unblinking recognition of the obvious. He described mobile phones as 'a necessity item'.[41] Texas Instruments Inc., the second-biggest maker of chips for mobile phones, said on March 10 demand for semiconductors used in handsets that can download music and access the Web was lower than anticipated.[18] Sony Ericsson Mobile Communications Ltd., the world's fourth-largest mobile-phone maker, said on March 19 first-quarter earnings and revenue will fall because of slower handset sales, higher research costs and a parts shortage.[18]

Handset sales rose 13% to $14.6billion (9.2 billion euros), missing views.[23]

In early trading, Nokia shares have plunged $4.19, or 12.4%, to $29.50. [39] Nokia dropped as much as 11 percent in Helsinki trading, the biggest slide in almost four years.[24] Nokia profits fell short of the 42 percent increase predicted by analysts polled Dow Jones Newswires.[33] Of analysts covering Nokia in the past year, 35 rate it "buy,'' nine say it should be sold and seven have a "hold'' recommendation, according to data compiled by Bloomberg.[18] Fundamentally, Nokia's performance over the first three months of the year was sound, and more or less in line with expectations.[37]

Nokia cited a higher proportion of lower-priced products and the negative impact of the weaker U.S. dollar.[29] The lower year on year ASP was primarily due to a higher proportion of lower priced products and to a lesser extent the negative impact of the weaker U.S. dollar.[44]

A key culprit is the weak U.S. dollar, which is cutting into prices in euro terms.[27]

Kallasvuo noted that had the currency markets had remained stable the company would still be talking about expectations of market growth in euro terms.[37] 'Some markets are growing nicely, some are okay and some are showing little or no growth this year,' Kallasvuo said.[53]

"The recent era of growth rates of 20 per cent is now over; what remains is a fight over market share."[27] The competitiveness of our product portfolio is reflected in our market share and we target market share gains in the second quarter.[46] Vaisanen said a reorganization of different product groups somewhat obscured the currency effect, but added the next three months will also look weak. "The second quarter '08 may not be strong for Nokia," Vaisanen wrote.[17]

Ovum's Garner agreed. "Nokia is better placed than any other vendor to ride a slowdown and even emerge strong from it," he said. "It has a broader portfolio of competitive products across all segments than any other and somewhat higher margins as a buffer against harsher price competition."[23] A slight miss isn't enough to make our daily doomsday list. That requires a bit of something extra, which Nokia CEO Olli-Pekka Kallasvuo provided yesterday when he dismissed the threat from Apple's (Nasdaq: AAPL ) iPhone by referring to it as a "niche product."[51]

Kallasvuo said Nokia plans to unveil "lots' of new devices in the second half.[12] If Sprint doesn't attract any new financing options, it has hinted it may scale back the scope of the WiMAX network. Nokia made absolutely no mention of WiMAX on its earnings call, focusing instead on the industry's newest network fad, Long Term Evolution.[48] Having raised the slow-down warning flag, however, Nokia executives spent a fair portion of the earnings conference call backing away from any prediction of where Europe was headed.[40]

Nokia's main market, Europe, is slowing down, and the company now gives clear evidence of that," said Carnegie analyst Janne Rantanen.[11] Nokia's results in the U.S., where the company has long been much weaker than in the rest of the world, were even more dismal than usual.[26] HELSINKI -- Nokia posted strong first-quarter results, reporting revenues of €12.66 billion, up 28% year-over-year.[54] Nokia's results, while solidly in-line, failed to deliver the dazzle that people would expect from the dominant player in a robust market.[40]

NSN incurred a 100-million Euro restructuring charge in the first quarter, and Simonson said it expects the second quarter's restructuring costs to be even higher. [48] Consensus expectations were for earnings of 0.37 euro a share, according to a survey of 30 analysts conducted by FactSet.[13] "Investors have primarily focused on negative news from suppliers,'' said Robert Jacobsen, an analyst at Jyske Bank in Silkeborg, Denmark. Meeting earnings estimates could trigger a gain in the shares, he said.[18]

Years later, the Mac is gaining share as analysts grave-dance over Vista.[49]

Apple may have only recently begun selling the iPhone in Europe, but here the device now trails only Research In Motion (Nasdaq: RIMM ) in North American market share.[49] CEO Kallasvuo: "Looking at the second half, it's very clear that the new model will ramp up -- that will be seen in our market share numbers in the United States in the second half."[55]

A downbeat forecast for the next quarter hit the Finnish group's share price.[44]

The world's leading supplier of cellphones shipped 115.5 million units during the quarter, up 27% over last year and slightly above the normal seasonality and trends.[54] Handset operating margins fell to 21.2% -- up from 16% a year ago but down from 22.8% the previous quarter.[23]

Nokia noted that the strong growth in volume, was offset by a "significant ASP decrease", driven by lower-end handsets.[15] The European common currency has strengthened about 10 percent against the dollar in 2008 and is up 18.2 percent over the last 12 months. "This (currency) move has been dramatic. It is unprecedented," Nokia Chief Financial Officer Rick Simonson told Reuters.[35] Nokia closed 18.53, or $29.56, down 12 percent, or 2.43, for its biggest one-day drop since July 2004.[10]

"Like many European companies that sell abroad where goods are valued in dollars or currencies linked to the dollar, Nokia is suffering," said Pasi Vaisanen, an analyst at Glitnir Bank.[33] Pasi Vaisanen, an analyst with the Icelandic investment bank Glitnir, wrote Thursday that the weakening dollar had about a 7% impact on quarterly sales growth.[17]

Compared with last year, the handset-maker is three points ahead, and the quarterly blip is not likely to offer much opportunity for either Sony Ericsson or Motorola (nyse: MOT - news - people ). "This is not an upside for Sony Ericsson," said SEB Enskilda analyst Mats Nystrom. "On the contrary, they will have to fight hard." [28] "The company does not have that many new devices to bring to the market in the quarter."[17]

Kallasvuo did not provide provide any figures. China is Nokia's largest single country market, while Europe is its biggest regional market. [20] Cargotec dropped 9.04 percent to 26.55 euros on disappointing January to March earnings figures.[38]

SOURCES

1. The Associated Press: Weak outlook hits Nokia stock, despite 25 pct profit rise
2. AFP: Nokia's first quarter results disappoint
3. EETimes.com - Analysts remain upbeat on Nokia despite economy
4. Nokia shares fall 13% on poor sales forecast - Times Online
5. BBC NEWS | Business | Outlook worries hit Nokia shares
6. The Associated Press: Nokia's 25 percent profit jump falls short of expectations
7. Nokia Posts 25 Pct Gain in Q1 but Less than Expected - International Business Times -
8. Nokia Posts Quarterly Profit, Warns of Slowdown
9. Nokia Slips But Still Leaves Rivals In Its Wake - Smarthouse
10. Nokia shares tumble 12% on disappointing profit - International Herald Tribune
11. Nokia profit in line, but market view pummels stock - Forbes.com
12. Bloomberg.com: Worldwide
13. Nokia's adjusted quarterly earnings beat expectations - MarketWatch
14. PC World - Business Center: Nokia Sales up 28 Percent, but Analysts Are Disappointed
15. Earnings: Nokia Posts Profit; But Misses Analyst Estimates; Expects Market Decline - washingtonpost.com
16. Nokia shares slide after forecast for shrinking market - International Herald Tribune
17. Nokia Takes Knocks as Weak Dollar Erodes Market (Nokia) at SmartMoney.com
18. Bloomberg.com: Invest
19. Nokia Shares Take a Dive
20. Nokias Q1 China, Europe ASPs rise sequentially
21. Nokia posts subdued Q1 profits as market share, ASPs decline vs Q4 UPDATE - Forbes.com
22. Nokia reports 25 per cent Q1 profit rise - Business
23. Nokia Misses Views, Sees Weaker Sales In Global Slowdown
24. Bloomberg.com: Europe
25. Market view hits Nokia stock: Scientific American
26. Nokia Delivers, but Cautions on Year
27. reportonbusiness.com: Nokia results rattle mobile phone sector
28. Nokia Still Looks Strong - Forbes.com
29. Shaky Market Outlook Sinks Nokia | Telecom | ERIC MOT NOK QCOM - TheStreet.com
30. Nokia's Earnings Up, But Its Market Share Drops In North America -- Cell Phone -- InformationWeek
31. European Stock Market Preview - Companies * Europe * News * Story - MSNBC.com
32. Earnings roundup: Nokia, Supervalu - Forbes.com
33. The Associated Press: Nokia's 25 percent profit jump falls short of expectations
34. ITProPortal.com - Nokia sells more mobiles than competition but fails to generate more profits
35. Nokia profit in line, but market view pummels stock | Business News | Reuters
36. Electronista | Nokia sells 115.5m phones, sees 39% share
37. Helsingin Sanomat - International Edition - Business & Finance
38. Helsinki shares end higher, led by TietoEnator; Cargotec slumps UPDATE - Forbes.com
39. Tech Trader Daily - Barron's Online : Nokia Shares Tumble On Subdued Handset Outlook
40. Nokia's results fail to dazzle - Apr. 17, 2008
41. Telecoms and Software News
42. Nokia reports strong Q1 but expects US decline - Computer Business Review
43. Nokia Posts Strong Q1 Sales Figures, Market Share Drops 1% (MobileBurn)
44. EETimes.com - Nokia sees Q1 profits rise 25%
45. Telecoms and Software News
46. Nokia Announces Q1 2008 Results | The Boy Genius Report
47. Bloomberg.com: Germany
48. NSN Still Struggling Under Price Pressures
49. Time to Sell Nokia?
50. Nokia CEO Disses iPhone, Doesn't Seem Worried That U.S. Market Share Slipped Again - Mobile Blog - InformationWeek
51. Thursday's Worst Stocks in the World
52. Nokia suffers 11pc fall as phone market 'will shrink' - European, Business - Independent.ie
53. Nokia CEO downbeat on Western European handset market UPDATE
54. Circuits Assembly - Nokia Shows Q1 Strength
55. HIGHLIGHTS-Nokia Q1 results conference call | Markets | Markets News | Reuters

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