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Nokia Expects Decline in 2004 Q1 Earnings
Apr 6, 2004
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Nokia (Helsinki, Finland) has announced that its first quarter 2004 net sales will be lower than expected.

Nokia's net sales for the first quarter 2004 are estimated to be EUR 6.6 billion (approx. U.S. 7.24 billion), representing a decline of 2 percent compared to the first quarter 2003. The company has expected its earning to up 3 percent to 7 percent, according to a press release from the company that indicated its earnings will now be lower.

Sales of the mobile phones and multimedia business groups were below expectations, the company says. Mobile phone sales declined in Europe and Asia due to lower than expected volumes and a product mix weighted more towards the low end.

Due to certain gaps in its product portfolio, mainly in the mid-range, the company was not able to fully capitalize on positive market developments. Global mobile phone volume growth is estimated to have been in excess of 25 percent in the first quarter 2004 while Nokia volumes grew by 19 percent. Networks exceeded expectations with estimated sales of EUR 1.4 billion (approx. U.S. $1.69 billion), which represents 16 percent growth compared to the sales in the first quarter 2003. Enterprise Solutions is expected to report sales slightly better than planned.

"Obviously, we are not satisfied with our sales development during the first quarter, but I am pleased that once again we have managed to achieve good, solid profitability," Jorma Ollila, Nokia chairman and CEO, said in a written statement. "We are particularly pleased with the sales and profitability development in the Networks' business."

Mr. Ollila said that the overall Nokia sales were negatively impacted because it company was not able "to fully exploit the usual seasonal market pick up in March, and the mobile phones product mix was weighted towards the low end."

Although he says Nokia is already starting to see long-term benefits of the new organization, in the short term its implementation slightly slowed down the company's reactions and operational effectiveness.

"With the new organization in place, we will continue to build on our core strengths of brand, demand-supply chain management and cost leadership—while driving further efficiencies in research and development," Mr. Ollila said. "While our product portfolio in the first quarter was not at its strongest, we believe that during the year we will see improvement as we bring new products to market."

Nokia will announce the full first quarter results together with the second quarter outlook on April 16, 2004.

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