Asian markets to drive Nokia sales growth

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Nokia on Thursday lifted its forecast for global mobile phone sales this year, as the world’s biggest handset maker’s third-quarter results beat expectations.

The Finland-based company estimated worldwide mobile phones sales at 780m this year, compared with a previous forecast of 760m, with much of the expansion in emerging markets.

Even so, the shares fell 4.7 per cent to €13.36 in Helsinki. Nokia shares have this year lagged behind rivals Motorola and SonyEricsson, undermined by the Finnish mobile maker’s disappointing second-quarter results.

The sales upgrade followed strong results from Motorola and SonyEricsson this week. Nokia shipped a record 66.6m mobile phones in the third quarter, corresponding to a market share of 33 per cent, the same as in the previous quarter. Earnings per share rose to 20 cents from 18 cents in the second quarter, beating the company’s upwardly revised guidance of 18-19 cents.

Net sales came to €8.4bn ($10.1bn), up from €8.1bn in the second quarter. The results showed a handset margin of about 16 per cent compared with 13 per cent in the second quarter, even as average selling prices fell more than expected.

Jorma Ollila, chief executive, said advances in the large Asian markets, including China, had helped drive Nokia’s performance. “We have a very strong position in a number of developing markets, where margins are higher.”

The profitability of Nokia’s Multimedia unit soared, going some way to offset the decline in overall prices to an average €102 from €105 in the second quarter.

Richard Windsor, analyst at Nomura, said: “There has been a large number of new products, which have better margins than older products. [The] Multimedia [business unit] is scaling up nicely.”

Nokia has launched a number of up-market phones, which combine third-generation functions with new music tools and more powerful cameras. But the sharp decline in Nokia’s handset prices rattled nerves on the stock market, raising questions about the company’s ability to maintain margins as prices decline.

Nokia said the network market would remain “fiercely competitive” ahead of China’s decisions on third-generation operating licences, due next year. But in handsets, Mr Ollila said Nokia was expected to gain market share in the crucial fourth quarter. “We expect to be benefiting from an improved product portfolio,” he said. “There is a good order flow, which gives us a strong indication for the holiday season.”

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