Nokia raises outlook for global market growth

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Nokia on Thursday significantly raised its outlook for the global mobile market, saying it would grow by 15 per cent or more this year, which would mean shipments of about 914m handsets.

The Finnish market leader’s previous forecast was for growth of 10 per cent or more from about 795m handsets in 2005. Motorola, the world’s number two handset maker, does not produce overall forecasts but was thought to be in line with Nokia’s original numbers.

Speaking at his last annual meeting as Nokia’s chief executive on Thursday, Jorma Ollila said about 80 per cent of the world’s next 1bn mobile subscribers would come from emerging market countries.

In Chongqing, China, Nokia yesterday launched three new entry-level phones, aimed customers in developing countries. First shipments of the N1112, N2310 and N2610 models are expected in the second quarter. Soren Petersen, senior vice-president, said at the launch in China: “In 2008, Nokia expects that 3bn people will be owning a mobile phone, with much of this growth coming from markets like China, India, south-east Asia and Africa, where penetration levels are still relatively low.”

Nokia has this month highlighted the growing importance of emerging markets. Thursday’s launch of the new models, all priced at below €100 ($120), followed the opening of Nokia’s new plant in Chennai, India, this month, which will produce both handsets and networks.

Nokia shares surged 4.8 per cent to €17.49 in Helsinki as Mr Ollila’s upgrade of Nokia’s market outlook raised hopes of strong first-quarter earnings.

The acceleration of growth in the global handset market was seen to mainly benefit Nokia, the world’s biggest mobile supplier.

“Nokia is the main beneficiary as it has the greatest share of the segment that is growing fastest,” said Richard Windsor, analyst at Nomura.

“It also makes a far higher return on every handset sold compared with competitors.” Confidence in Nokia’s ability to tap the growth on Thursday outweighed concerns about the pressure the increasing emphasis on emerging markets puts on the company’s profit margins.

In the fourth quarter of last year, the average price of Nokia’s handsets fell below €100 for the first time. Mr Windsor said Nokia was “clearly brimming with confidence”.

Mr Ollila’s comments came as he prepares to step down as chief executive, a position he has held since 1992, when Nokia was a little-known Finnish industrial company.

Mr Ollila, who will become chairman of Royal Dutch Shell, is set to be replaced in June by Olli-Pekka Kallasvuo, currently Nokia’s chief operating officer.
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