Nokia Treads Carefully in Global Slowdown
10/15/08 - 01:09 PM EDT
Robert Holmes
Nokia (NOK Quote - Cramer on NOK - Stock Picks) is set to deliver its third-quarter report Thursday, with many analysts hoping the world's largest handset maker can overcome the global economic slowdown that has hampered cell-phone sales in 2008.
Nokia is expected to post net income of 1.27 billion euros, or 34 euro cents a share, excluding items, according to Thomson Reuters. That would mean a decline of 19.6% from a year ago and a decrease of 6.6% sequentially. Revenue should reach 12.92 billion euros, an increase of just 0.2% from a year earlier. The Finnish mobile-phone giant has tempered expectations for the third quarter with a preannouncement in September, when it said it expected its mobile device market share in the third quarter to be lower sequentially. That outlook reflects its decision to not meet certain aggressive pricing of some competitors, increasing competition and the temporary impact of a slower ramp-up of a mid-range device. That outlook has punished Nokia's stock, as shares tumbled more than 30% over the last three months. Rival Motorola (MOT Quote - Cramer on MOT - Stock Picks) has given back 20% and Qualcomm (QCOM Quote - Cramer on QCOM - Stock Picks) has slid 12%. "The Street will be looking to Nokia as global consumer play on handsets to see if business got incrementally worse in September following their early negative pre-announcement," writes Mark McKechnie, analyst with American Technology Research, in an email. In the preannouncement, Nokia said its strategy is to take market share only when it believes it to be sustainably profitable in the longer term. Nokia also said it has not broadly participated in recent aggressive pricing activity, as the negative impact to profitability would outweigh any short-term incremental benefits to device unit sales.
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