STOCKHOLM -(Dow Jones)- Nokia, the world's largest handset maker by sales, is expected Thursday to report a 42% increase in first-quarter net profit to EUR1.39 billion compared with EUR979 million in the year-earlier period, according to a Factset poll of 22 analysts.
Sales are expected to rise 28% to EUR12.62 billion from EUR9.86 billion, driven by growth in booming emerging markets, while operating profit is expected to rise 39% to EUR1.76 billion from EUR1.27 billion.
Nokia reiterated in late March its guidance for near 10% global unit volume growth in 2008, despite weaker macro economic conditions hitting rivals' sales in developed countries.
"The focus on Nokia will be on the ASP (average selling price) as the market mix changes with stronger than expected BRIC (Brazil, Russia, India, and China) countries and weaker than expected mature markets," said Stockholm-based Kaupthing analyst Per Ekstrand. "We'll also be watching for the effects of the declining U.S. dollar."
Nokia's ASP is forecast to slip from the EUR83 level it reported in the fourth quarter.
Nokia is the dominant mobile vendor in fast-growth emerging markets, using its 40% global market share to keep costs down. Its position in these markets and proportionally lower exposure to developed markets such as North America and Western Europe means it feels the impact of slowing sales in these areas less than its rivals.
Sony Ericsson said in March slowing market growth of mid-to-high end phones in markets where it has a strong presence is hurting sales, while certain component shortages for popular mid-price phones also led to modest unit-sales growth in the first quarter.
Sony Ericsson's announcement follows lowered forecasts from U.S.-based mobile-chip maker Texas Instruments, which it attributed to weakening demand for the high-end and third-generation handsets for which it makes chips.
WestLB analyst Thomas Langer said that while the big question this quarter is likely to be to what extent the weakening macro-economic environment is affecting demand for third generation phones, "Nokia should weather the storm due to its superior handset portfolio."He has a buy recommendation on the stock with a EUR26 target price.
Nokia could increase its market position in the first quarter from 40% in the fourth quarter, taking advantage of continuing woes at U.S. rival Motorola and at Sony Ericsson, analysts said. In the fourth quarter, Motorola's loss of market share saw it slip to third place globally, behind Nokia and Samsung Electronics Co. Sony Ericsson had the fourth-largest market share in the fourth quarter.
Details on its expected jump into touchscreen phones would help ease concerns that the company is missing out on the hype created by Apple's iPhone, while analysts will also look for progress in software and services.
Meanwhile, a generally weak equipment market in 2008 is expected to weigh on Nokia Siemens Networks, the joint venture with Germany's Siemens, but there should be signs of improved profitability amid ongoing restructuring there, analysts said.
Nokia shares have fallen 14% in the past three months compared with a fall of 19% on the DJ STOXX 600 Telecommunications index.
At 1300 GMT Tuesday, Nokia shares were trading down 0.3% at EUR20.41.
-By Adam Ewing, Dow Jones Newswires; +46 8 545 130 95; adam.ewing@dowjones.com
(END) Dow Jones Newswires
Posted to the site on 15th April 2008
Posted to: www.cellular-news.com/story/30537.php