Nokia Cuts Sales Forecast

Cell phone giant Nokia cut its 2001 industry sales forecast for a fifth time as slowing economies lead consumers to delay purchases. The company sees no rebound until the second quarter of next year.

Nokia, based in Espoo, Finland, lowered its estimate for 2001 cell-phone sales to 380 million phones, from 390 million. The company expects 420 million to 440 million phones will be sold next year, Chief Executive Jorma Ollila told investors in New York.

The lower forecast for this year “is the biggest surprise,” said Rob Sellar, who helps manage Aberdeen Asset Management’s $1.2-billion Global Tech Fund, which includes Nokia shares. “That’s certainly at the low end of the market’s expectations.”

Industrywide sales of mobile phones probably will fall from last year’s 405 million, the first-ever decline, as phone companies cut subsidies on new handsets and consumers wait for phones with faster Internet access.

Nokia, once the most valuable company in Europe, has seen its shares drop by more than half since June 2000. Profit at Finland’s biggest company declined in the last two quarters. Its U.S.-listed shares fell $1.52, or 6%, to $23.72 on the New York Stock Exchange.

Shares of Nokia rivals also fell. Motorola Inc. slid 45 cents, to $17.51 on the NYSE, while Ericsson’s U.S.-listed shares fell 19 cents, to $5.67 on Nasdaq.

After a decline in first-quarter sales, Nokia expects “low double-digit” sales growth in the second quarter, accelerating to as much as 35% in the fourth quarter of 2002. Full-year sales are expected to rise 15% next year as demand for mobile phones revives, the company said.

Nokia reiterated a forecast for profit of 18 cents to 20 cents a share in the fourth quarter of this year as demand leading up to the holidays boosts sales by 20% from the previous quarter. Nokia, which sells a third of the world’s cell phones, has weathered the slowdown better than rivals such as Motorola and Ericsson, analysts say.

Still, Ollila is pessimistic about an economic revival before the second half. “We would be looking for a rebound in the U.S. economy in the fourth quarter,” he said.

“We’re definitely not more optimistic than that. I don’t think there will be any good news from Europe in the coming nine months.”