Nokia ( NOK) reminded investors Friday that it's always darkest before the dawn.The struggling wireless giant said that contrary to the hopes of its many Wall Street fans, its sales numbers will have to get even worse this year before business finally picks up in earnest around year-end. After the Finnish cell-phone giant handed Wall Street its
"Market share is absolutely critical," says Ollila. "It gives us tremendous advantage." In years past, price has been an effective weapon for Nokia. Motorola was dethroned as the handset king in the mid-'90s after Nokia gambled that lower prices would win away more of Motorola's customers. Motorola has since dropped to No. 2 and, thanks to missteps of its own, has yet to show it has stopped the fall. American Technology Research analyst Albert Lin points out that Korea's Samsung made sales gains that correspond to the sales losses posted by Nokia. This give-and-take between Nokia and Samsung signals that the Korean electronics giant has become a formidable player in the global phone industry, says Lin, who has a buy rating on Nokia. "We believe this serves as further proof that the industry remains healthy and the normal shifts between Tier 1 players will continue as it has for the last few years," Lin wrote in a research note Friday. For its first quarter ended March 31, Nokia posted earnings of 816 million euros ($979.2 million), or 17 European cents a share, down from 977 million euros, or 20 cents a share, a year earlier. Sales slipped 2% from a year ago. For the second quarter, Nokia predicts earnings will be just 13 to 15 euro cents a share, which is equivalent to about 16 cents to 18 cents a share and well short of Wall Street's 23-cent consensus estimate. The company said second-quarter sales would be flat to even with the year-ago 7 billion euros ($8.4 billion). That's short of the Wall Street estimate of $8.52 billion. Handset sales aside, Nokia saw better-than-expected demand for wireless networking gear as telcos boost capacity and make upgrades. This is good news for the rest of the equipment supplier pack, led by Ericsson ( ERICY), Lucent ( LU) and Nortel ( NT). Nokia bulls are now looking ahead to a potentially stronger future. In fact, the
recent introduction of an improved N-Gage game-console phone suggests to some investors that Nokia's design talents and market strength will soon have competitors on the run again.