Update: Nokia Gains Ground on China Network Deal
Updated from 8:34 a.m. ET
Shares of
Nokia
(NOK)
surged this morning after the mobile phone giant announced a $230 million network expansion deal with a Chinese communications company.
Nokia shares recently rose $1.35, or 6.3%, to $22.69, up from Friday's closing price of $21.34 on the
New York Stock Exchange
.
The Finnish mobile phone company said this morning it signed a deal with
Fujian Mobile Communications
to expand its GSM network by more than 3 million subscribers. Nokia will also provide a range of network infrastructure as well as professional services, the company said.
Nevertheless,
Merrill Lynch
downgraded its intermediate-term rating on Nokia to accumulate from buy, citing likely intense pricing pressure and concern that the mobile telecom sector will not meet its internal 30% to 35% first-half revenue target due to a soft handset market. (
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TheStreet.com
wrote a
separate story on the latest problems battering the mobile phone industry.)
Merrill, which maintained its long-term buy rating on the company, also slashed its earnings-per-share forecast for Nokia by 10% to 0.79 euros for 2001 and by 18% for 2002.
The investment firm also acted on Nokia's rivals, cutting its earnings forecast for
Ericsson
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by 16% for this year and by 22% for 2002, while maintaining its accumulate rating. Merrill also reduced
Alcatel's
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earnings-per-share forecast by 12% for 2001 and 20% for 2002, and lowered its projection on
Marconi
(MONI)
by 14% for 2001 and 8% for 2002.
Shares of Ericsson recently gained 2.3% to $8.44. Alacatel fell 1.2% to $40.18, while Marconi rose 3% to $15.
