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Nokia Trims Margin Targets

It sees falling cell phone prices.

Nokia (NOK) - Get Nokia Oyj Report trimmed its profit margin targets Tuesday, citing sliding cell-phone selling prices and increased exposure to the lower-margin infrastructure business.

The Helsinki-based wireless titan said at its Capital Markets Day in Amsterdam that it expects to post a 15% operating margin for the next year or two, below the previous 17% target. Nokia said the primary driver of that decline will be increased infrastructure business tied to the Nokia Siemens linkup to be finalized in January, though it also trimmed its mobile device margin target to 17% from the previous 17%-18%.

Nokia said it expects industry mobile device volumes in 2007 to grow by up to 10% from the 970 million units Nokia estimates for 2006. The company said it expects the device industry to experience value growth in 2007, but expects some decline in industry ASPs, primarily reflecting the increasing impact of the emerging markets and competitive factors in general.

The company said that in its development efforts it will pay special attention to certain selected devices, a move that comes together with a number of other changes. By refreshing its design approach, introducing a consumer-category driven strategy to its product portfolio, and focusing its marketing expense, Nokia aims to reinforce its device market leadership and continue to further refine its mid-range portfolio.

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