Cell-Phone Makers Remain Under Siege

Updated from 2:21 p.m. EST

Shares of mobile-phone giant Nokia (NOK Quote) fell Tuesday after Morgan Stanley Dean Witter downgraded the stock to underperform from neutral, citing concerns over slowing global demand and expectations for a decline in telecom equipment spending in China in the first half of the year.

Morgan Stanley set a price target of $13 on the stock, some 40% below the Friday close of $22.50. The firm cut its 2002 earnings estimate by 6% to 0.73 euros, or 65 cents a share, and lowered its 2003 earnings estimate by 4% to 0.81 euros, or 72 cents a share. The firm also slashed its forecast for global mobile-phone sales to 401 million for 2002, compared with the consensus forecast of 435 million. Morgan analyst Angela Dean said she expects subscriber growth to decline by 11% in China this year and wireless capital spending to fall between 10% and 20%.

In a separate research note, Merrill Lynch also voiced concerns that the speculation about wireless demand in China for 2002 was too optimistic. ...