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Nokia cuts Q4, 2009 outlook on slowing market growth

Nokia Corp., the world's largest mobile handset maker, Friday became the latest company to fall victim to the financial crisis, lowering its expectations for the fourth quarter and 2009 as the "rapid change" in global consumer spending weighs on industry volumes.

"In the last few weeks, the global economic slowdown, combined with unprecedented currency volatility, has resulted in a sharp pull back in global consumer spending," the company said in a

Nokia said sales and profitability at its core devices and services business would be hit. As a result, it said it would take additional cost cutting measures, curtailing the use of external contractors and services and cutting operational expenses in 2009.

It said it would provide more detail at its Dec. 4 capital markets event in New York.

Nokia's profit warning is the latest sign of the impact of sharply slowing consumer confidence on mobile phone manufacturers and operators.

Vodafone Group PLC, the world's largest mobile operator by revenue, earlier this week warned that full-year revenue would fall short of its forecasts and unveiled plans to cut GBP1 billion ($1.56 billion) in costs.

Carl-Henric Svanberg, chief executive of network equipment maker LM Ericsson Telephone Co. said late October that its resilient third-quarter results should be taken with a grain of salt, after an exceptionally weak second quarter. Its Sony Ericsson mobile phone joint venture with Sony Corp. has warned on profits twice this year.

Meanwhile, Nokia Siemens Networks, Nokia's infrastructure joint venture with Germany's Siemens AG, said Tuesday it would shed more jobs and intensify restructuring measures to cut costs by EUR2 billion a year by the end of 2009.

Analysts warned that Nokia's suppliers would be hit. One Paris-based analyst said chip maker STMicroelectronics NV may now have to trim its outlook. Nokia accounts for about 20% of its revenue.

Nokia Friday said it expects total industry volumes in the fourth quarter to be 330 million units, up from the estimated 310 million units in the third-quarter, and now expects 1.24 billion phones for the full year, down from the 1.26 billion it estimated in October. For 2009, it expects volumes to be below this year's level.

The global cellphone market contracted once before, in 2000/2001, said WestLB analyst Thomas Langer, but he said "this should be a deeper consumer slowdown" with the first and second quarters next year "very difficult."

Nokia said it now sees weakness across all product segments, particularly developed markets.

Still, Nokia Chief Executive Olli-Pekka Kallasvuo said:"Nokia believes that its advantages of scale, leading brand, superior logistics, low cost and broad product portfolio are competitive advantages that will enable us to distinguish ourselves from the competition in a challenging 2009."

In the third quarter, Nokia reported a 5% fall in revenue to EUR12.23 billion and a 30% drop in net profit to EUR1.09 billion.

Friday, it reiterated forecasts for its share of the mobile device market in the fourth quarter to be flat to slightly up compared with the third quarter.

Nokia shares fell as much as 11% after the surprise statement, but later recovered. At 1500 GMT, they were down 1.5% at EUR10.18.

"Nokia's warning wasn't a shock; the move has been on the cards for some time, as there have been clear signals from retailers of weaker consumption," said Handelsbanken analyst Jan Dworsky.

Источник: Total Telecom

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