Nokia Sticks by Flat Earnings Forecast; Stock Surges 13%

Finland’s Nokia defied a slowdown in the global telecommunications industry by being the sole major mobile phone maker not to cut its first-quarter earnings forecasts, driving its shares up 13%. Nokia, the world’s largest mobile phone maker, stuck to its first-quarter earnings forecast of flat year-on-year earnings per share of 17 cents, after rivals Ericsson and Motorola Inc. jolted stock markets by trimming their expectations. But Nokia admitted it was not immune to reduced global demand for mobile phones, announcing a reduction in its first-quarter sales growth forecast amid an economic slowdown in the U.S. Nokia’s huge economies of scale and focus on the inexpensive segment of mobile phones allowed the company to make a profit on cheap phones, something rivals are failing to do, analysts said. Its shares rose $3.15 to close at $24.95 on the New York Stock Exchange.

Nokia Chief Executive Jorma Ollila said more difficult market conditions had prompted the company to cut its first-quarter sales growth forecast to about 20% from an earlier estimate of 25% to 30%. This meant Nokia was likely to post first-quarter sales of about $7 billion. Nokia also cut its sales-growth target in its key mobile phone division to 15% to 20% from an earlier 25%. Nokia said the first-quarter estimates were subject to market developments in the final weeks of this quarter. It did not reiterate first-half and full-year earnings guidance given Jan. 30 but said it would give guidance for those periods when it releases first-quarter earnings April 20.