Nokia shares take a hit after Q1 report

NOKIA SHARES HAVE taken a tumble after the Finnish mobile company came out with lower than predicted first quarter earnings, and a gloomy forecast for the coming year’s global handset market.

Shares in the mobile giant dropped 13.5 per cent, after it reported a net profit of only $1.9 billion in Q1 of 2008, which despite being 25 per cent up on the $1.6 billion the company made in Q1 of 2007, was well below analyst expectations.

A poll quoted by Dow Jones Newswires was predicting that Nokia would see something in the region of a 42 percent rise in profit, but instead, company revenues grew by only 28 per cent reaching a paltry $20 billion.

Nokia did reiterate its belief that the mobile phone market would grow by 10 per cent in 2008, but said that because of the weak US dollar and the economic crisis, the market would lose value compared to 2007. As for its predictions on telephone infrastructure, Nokia altered its original 2008 market outlook of " very slight growth," to a dead "flat", again blaming the weak dollar.

But despite the disappointing report, Olli-Pekka Kallasvuo, Nokia’s CEO, reckoned that the first-quarter results were satisfactory.

Nokia said that it had its strongest growth in mobile phone sales (34 million units, a third of all the company’s sales) from the Asia-Pacific region, which even overtook Europe as the company's biggest market. Europe, in second place, saw the sales of 26 million units, and following closely in third place was China, with 21 million units. The faltering North American market continued to plummet, with a staggering 46 per cent slump in sales to a pathetic 2.6 million mobile devices in Q1.

It remains to be seen how Nokia's competitors, Samsung, Motorola and Sony Ericsson, fare when they post their Q1 earnings next week. µ