Nokia Expects Mobile Phone Market More Than 170 Million In 2Q

STOCKHOLM -(Dow Jones)- Nokia Corp. (NOK) expects the total market for mobile phones to be over 170 million units in the second quarter and for Nokia to gain market share, Chief Executive Jorma Ollila said Thursday.

Ollila, in a conference call with analysts, said that in the first quarter, Nokia had made "clear market share gains in markets where the product portfolio is the strongest."

Those gains were offset by weakness in the Americas, among other places, where Nokia's sales have been hit by a transition to new technologies.

Nokia's position in those technologies, such as GSM, a leading cellular wireless standard, and digital mobile technology, is relatively weak, he said, acknowledging that the company has not reacted fast enough. He stressed it is addressing the issues.

He said it will take a bit of time to recover in the Americas and real progress should be expected only in 2006.

Ollila said competitors' average selling prices for mobile phones overall had been consistently lower in the past quarters while Nokia's had held steady.

"We would be quite happy with flattish (average selling price) development," he said.

Ollila said Nokia's ASP would benefit from a strong product portfolio for phones that fetch high prices but that would be offset by growth in emerging markets where ASP is lower.

Regarding margins, Ollila noted that they were higher than expected in the networks division in the first quarter but in the near term "they could be a little lower," he said.

He added, however, that the division's margins are not far from what Nokia can achieve in the second half of the year. The network division's margins were 15.4% in the first quarter; the company has a goal of 14% in that division in the medium term.

Ollila said Nokia's marketing costs would be higher in the second quarter compared with the first, as campaigns for some products are stepped up.

The market for third-generation phones, which enable fast data and video transmission, didn't quite meet expectations in the first quarter and Ollila said he sees difficulties in reaching 70 million such phones sold in the overall market this year.

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

(END) Dow Jones Newswires"

Posted to the site on 21st April 2005