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Nokia shares plunge following Motorola's 4Q profit, sales warning

Nokia shares plunge following Motorola's 4Q profit, sales warning

Nokia Corp.'s stock plunged more than 4 percent in Helsinki on Friday, following chief rival Motorola's profit warning and lower estimate of fourth-quarter sales.
After brisk trading, Nokia shares closed down 4.15 percent at euro15.26 (US$19.97).
"The trading volume of Nokia shares was six times higher than Thursday," said analyst Jani Raisanen at the Helsinki Stock Exchange.
Motorola, the world's second largest cell phone maker, warned Thursday that it expects a smaller profit in the last quarter of 2006 than earlier predicted. It said net sales in the period would be US$11.6 to US$11.8 billion (euro8.9 billion to euro9 billion), down from a previous estimate of US$11.8 billion to US$12.1 billion (euro9 billion to euro9.25 billion). The company's shares tumbled 12 percent Friday.
Motorola's warning was attributed to tighter price competition between the two leading handset makers, and analysts said they also expected Nokia to have suffered from lower handset prices during the traditionally good Christmas sales season.
"It could be that Motorola has now crashed against a hard wall and no longer can get a price premium with its outdated Razr product family," said analyst Jussi Hyoty at FIM Securities. "If Motorola has advanced with cheaper models, it may have affected Nokia's market share as well."
With its cheaper models Nokia has performed especially strongly in the emerging markets, such as Brazil, China, India and Russia, leaving Motorola trailing the Finnish company.
But analysts say Motorola's increasing volumes of lower-end models has toughened competition and Nokia will be forced to take action if it wants to maintain its leading position in those markets.
"Motorola is a latecomer in the emerging markets, and that is why it has to use price as a weapon," Hyoty said.
Nokia is scheduled to release its fourth-quarter and full-year 2006 earnings on Jan. 25.
The world's largest mobile phone maker is based in Espoo, near the Finnish capital, and has sales in 130 countries, employing 65,000 people.
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On the Net:
http://www.nokia.com


Updated : 2021-10-23 18:32 GMT+08:00