Nokia plans 40 new models this year

Brett Young

HELSINKI: Nokia, the world's largest mobile phone maker, posted better than expected quarterly earnings and forecast strong first quarter sales, indicating it is winning back market share.

Nokia had been losing market share to rivals such as Motorola Inc. and Samsung Electronics and it had to cut prices last year to stem the losses.

But analysts expect Nokia, whose shares were up nearly six percent in New York Stock Exchange trading, to do better this year.

"They're going to show substantial gains in the next few quarters," said Charter Equity analyst Ed Snyder who added that Samsung in particular could feel pressure from Nokia in the United States.

Fourth-quarter earnings per share (EPS) fell to 0.23 euros from an exceptionally robust 0.25 euros a year ago, but easily beat the Finnish company's own forecast of 0.16 to 0.18 euros and the average and median of market forecasts of 0.19 euros.

"If we look at the volumes of our competition, I think that we beat them left and right (in 2004)," chief executive Jorma Ollila said. "We're back to a growth path."

But the stock was still down 28 percent from a year ago in comparison with the DJ Stoxx European technology index, which fell 8 percent in the same period.

Nokia's fourth-quarter group net sales increased three percent to 9.1 billion euros, well ahead of the average forecast given by analysts of 8.5 billion euros and the company's own most recent forecast of between 8.4 billion and 8.6 billion euros.

Nokia said sales improved on stabilizing average selling prices and handset volumes as well as strong results at its network equipment unit, where sales rose 12 percent.

Nokia said phone sales volumes rose 19 percent from a year ago to 66.1 million units. Research firm Strategy Analytics said on Thursday that Nokia's market share rose to 33.1 percent in the quarter up from 30.7 percent in the third quarter.

OUTLOOK

Nokia forecast first-quarter earnings per share would fall to between 0.12 and 0.15 euros from 0.17 euros a year ago, due to a 60 to 80 million euro charge related to job cuts at its Multimedia unit. Analysts in a Reuters poll had on average been forecasting 0.15 euros per share.

It said sales would rise to 7.0 billion to 7.3 billion euros ($9.1-9.5 billion) from 6.6 billion a year ago, marking the first quarterly rise in four years and improving on the average of analysts' expectations of 6.9 billion.

The forecast of strong first-quarter sales contrasts more subdued outlooks from Motorola Inc. and Sony Ericsson.

Nokia said it aims to continue to claw back market share and plans to launch 40 new phones in 2005 versus 36 in 2004.

Ollila also said market growth could top Nokia's 10 percent forecast in 2005 with demand driven by color screen and camera phones and markets in Latin America, Russia, India and China.

(Additional reporting by Sinead Carew in New York and Lucas van Grinsven in Amsterdam)