Analysts Increase Nokia, Ericsson 2005 Revenue Forecasts"

STOCKHOLM -(Dow Jones)- Analysts have raised 2005 revenue forecasts for Nokia Corp. (NOK) and L.M. Ericsson Telephone Co. (ERICY) following fourth-quarter earnings reports in January and February respectively.

A poll of 36 analysts by SME Direkt also showed analysts have cut forecasts for Nokia's first-quarter operating profit by 3.6% to EUR855 million from EUR887 million. This is mainly due to significantly lower expectations for Nokia's networks unit. "Our Networks operating margin forecast for (1Q) is cut from 12.5% to 8.0% as the mix of revenues shifts to new emerging markets contracts and the gearing effect of seasonally lower revenues proves difficult to offset on a tightly stretched opex base," said Lehman Brothers following the fourth quarter report.

However, Nokia's revenue outlook has improved and analysts have raised estimates 5% to EUR7.16 billion in the first quarter, driven primarily by stronger sales in the mobile phones unit. The previous estimate was for EUR6.82 billion. "Although its (Nokia's) marketing efforts should keep margins under pressure, we believe its scale and improved market position are likely to make it outperform in a slowing and competitive market in 2005," said Handelsbanken in its review of fourth-quarter earnings.

Forecasts for Swedish rival Ericsson's revenue and operating profit have been raised slightly according to a separate poll of 35 analysts by SME Direkt.

Analysts have increased estimates of Ericsson's full- year 2005 operating profit by 1.8% to SEK29.81 billion following the fourth-quarter report Feb. 10. The previous estimate was SEK29.27 billion.

Most analysts expect Ericsson's margins to come under pressure in 2005 due to strong competition in a market with slowing growth. Gross margins in particular are expected to take a hit.

Analysts have raised revenue estimates 1.5% to SEK140.3 billion.

Ericsson reported an unexpectedly strong order book in the fourth quarter and some analysts have therefore upgraded their short-term revenue estimates.

"The order balance has led us to slightly increase our (1Q) revenue forecast," said Lehman Brothers.

-By Magnus Hansson, Dow Jones Newswires;+46 8 545 130 91, magnus.hansson@dowjones.com

(END) Dow Jones Newswires"

Posted to the site on 2nd March 2005