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Nokia Sees Strong Handset Sales Offset by Weak Infrastructure Sales
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Nokia has provided a mid-quarter update to its business outlook for the third quarter 2002. The company says that based on developments during July and August, third-quarter sales for the Nokia group are expected to be in the range of US$6.9 to US$7.2 billion.
Sales of Nokia mobile phones in the third quarter are expected to grow by 4%-9%, compared with the third quarter 2001. Nokia sees mobile phone profitability in line, if not exceeding, earlier expectations. Pro forma operating margins are expected to be at or above 20%, reflecting good take up of Nokia's new products, including the Nokia 7650 imaging phone.
Backed by a strong overall demand pickup especially in Europe during the first two months of the quarter, the company is increasingly confident with its full-year overall market volume estimate of 400 million handsets in 2002.
In mobile networks, the GSM market environment remained challenging with operator investments showing greater-than-expected declines. WCDMA equipment deployment and testing is proceeding well and the company expects WCDMA revenue recognition to start in the third quarter. As a result of the GSM market decline, Nokia Networks third quarter sales are expected to decline by approximately 5% compared with the third quarter in 2001, with Nokia Networks pro forma operating margins now estimated to be about 5% for the third quarter.
The sales estimate for Nokia Networks includes an expected recognition of revenue related to WCDMA network equipment of about US$490 million under the provision that set technology milestones are met by the end of the quarter.'"
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