The Finnish mobile phone manufacturer’s mid Q1 update indicates that network sales will decline. Nokia still insists however, that it is on track to meet profit targets. Even so, figures predict that the company must boost sales in both its network and handset divisions to meet its objectives for the year.
Nokia’s January network sales forecasts will not be met.
Nokia has given its mid Q1 update and its January network sales forecasts are unlikely to be met. The company’s shares fell 3% following the announcement, but Nokia says that profit targets are still in sight. Earnings per share had been predicted to reach a maximum of E0.17 and Nokia is indicating that reaching this target will not be a problem.
The network sales are nevertheless worrying. Network business revenues were forecast to be down between 16-20% on Q1 2001 results, but this figure is now likely to be closer to 25%. The industry is awaiting updates from other firms to determine whether the scale of the slump is only specific to Nokia.
Sales on handsets were expected to decline approximately 5% over Q1 and Nokia says the results are as predicted. The company will be launching a series of new handsets at the CeBit trade show this week, which will probably include its answer to the Sony Ericsson T68, the color screen phone. Customers have been demanding such a phone from Nokia and it will hopefully help to stimulate handset sales in Europe again.
Although the color handset is expected to be popular Nokia must not rely too much on sales of handsets since the market is still saturated. Until 3G technology becomes available for the mass market and spurs device sales, the company must concentrate on winning infrastructure contracts or it will loose the confidence of its investors.
Even with its new range of handsets, the company has the bold task of meeting its target of 15% revenue growth over the year. The figures show that Nokia must boost sales in both its network and handset divisions to meet this objective. Handset sales must increase 22% and network infrastructure sales need to grow 27% – a figure that looks beyond Nokia’s reach considering its Q1 performance and current industry trends.