Nokia's Solid 2000 Stands In Shadow Of Shaky 2001 - InformationWeek

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Nokia's Solid 2000 Stands In Shadow Of Shaky 2001

Acknowledging that the wireless-telco industry faces a "somewhat sluggish first quarter," Nokia Corp. CEO Jorma Ollila reduced the company's 2001 global forecast for industrywide handset sales to between 500 million and 550 million, down from earlier projections of a solid 550 million.

That said, the market leader closed 2000 with a net profit of $3.5 billion, or 75 cents per share, compared with a net profit of $2.29 billion, or 50 cents a share, in 1999. Net sales grew 54% year over year, from $17.6 billion in 1999 to $27.03 billion in 2000. For the fourth quarter, Nokia posted a net profit of $1.07 billion, or 23 cents a share, compared with a net profit of $759.2 million, or 17 cents, a year ago. Fourth-quarter net sales climbed from $5.67 billion in 1999 to $8.26 billion in 2000.

But the market's looking more closely at the future than it is at last year. "There is a slowdown that started in the second week of December in the U.S. [that] continues to be seen in orders for the first quarter," Ollila said during a conference call. He said demand should pick up in the United States by midsummer.

"Many investors look at Nokia as the most credible word on what the demand for global handsets is. The fact that they softened their forecast for 2001 is probably the final word," says Mark Roberts, managing director at First Union Securities. He expects competitors to follow suit with lowered sales projections.

Overall, net sales increased 54% in fiscal 2000--from $17.6 billion in 1999 to $27.04 billion last year. Operating profit climbed 48%, from $3.5 billion to $5.14 billion.

Nokia, which sold 128 million phones last year and depends on industry growth to sustain high profit margins, also says more intense price competition will compress its margins. Roberts says, however, the company is in the best position to survive a tough market because of its manufacturing efficiencies, research and development efforts, and understanding of consumer marketing.

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