Nokia Expected to Post Low Revenues

Friday, April 17, 2009

Nokia-Expected-to-Post-Low-Revenues-2 Finnish mobile phone maker Nokia is expected to announce dramatically low handset sales, revenues and net profits for the first quarter of the ongoing year, which will happen on Thursday, yet analysts are also looking to see whether the company will show any signs that it started to recover economically.

Currently, predictions don't look too bright, mainly due to the fact that Nokia, Motorola, Sony Ericsson and Palm reported low results last quarter, during the holiday season. The leading phone maker announced back then that its sales had dropped 19 percent compared to the previous year, while the operating profit had gone down by 80 percent.
The companies that managed to keep their heads up during the time frame were Research in Motion, which beat expectations and also announced strong Q1 revenues, and Apple. Given the fact that these two manufacturers are mainly focused on the high-end market segment, which is growing even when the market is in crisis, their performance is understandable, yet Nokia is mainly focused on mass-market phones and that might be a problem.
J.P. Morgan analysts say that “The handset picture in the first quarter is even more opaque than usual.” According to MarketWatch, we should see a 20 percent sequential drop in global Q1 phone shipments, higher than the customary decline after the holiday season, which was 10 percent.
The falling demand is mainly caused by consumers, reports say, as they are in no hurry to upgrade to new handsets, or opt for cheaper mobile phones than they usually would. According to BusinessWeek, sales plunged until the beginning of March, and now they are starting to go up. The company's stock price is reported to have risen 60 percent since March 6, when it reached the lower level for 2009.
According to Neil Mawston of Strategy Analytics, Nokia rushed to slow down production, and now it has “about four-to-six-weeks of handsets on hand,” which is quite little, suggesting that demand managed to rise above supply.


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