Nokia posts mildly surprising Q1

Unlike its main competitor, Ericsson, Nokia weathered the unfavorable economic environment to report first-quarter earnings that exceeded some expectations. Nokia brought in a $1.27 billion pre-tax profit, which was about a 6% increase from the year previous.

While Nokia continues to be the leader in the mobile handset space, the company predicts that it also will overtake market share from Ericsson in the next-generation and third-generation mobile-systems space in the next few quarters.

“We are extremely satisfied with the solid growth and profitability Nokia achieved in the first quarter, especially during these challenging market conditions,” said Jorma Ollila, chairman and CEO of Nokia.

“I haven’t seen anything that would change the basic parameters that will continue to make us successful in the next two or three quarters,” he continued.

Nokia’s net sales for the quarter reached $7.2 billion from $5.9 billion in the same quarter last year, with the company selling more handsets and network equipment. The company said sales of mobile phones were strongest in Europe and Asia-Pacific. Nokia Networks performed best in the Americas and Asia-Pacific, with Asia experiencing the most growth.

Despite its positive first quarter results, Nokia remained realistic about the possible effects the slowing global economy could have on its business, cutting its sales and profit outlook for 2001. It now expects sales to grow just 20% for the year. Prior to today, the company had indicated sales could reach between 25 and 35%.

However, Nokia does foresee gaining 40% market share of the global cellular phone market in the next few quarters, Ollila said. During its earnings call earlier today, the company reiterated its global market volume outlook of 450-500 million units for 2001.

Ollila also said Nokia has “high ambition” to extend its leadership beyond mobile handsets to the 3G mobile network infrastructure market.

“We expect [network growth] in the U.S. and Latin America to pick up in 2002 after operators have made technology decisions and have rolled out packet-based networks,” Ollila said.