Nokia Sinks on Warning of Slowdown

Nokia (NYSE: NOK) was down US$2.25 at $34.74 early Tuesday, after the Finnish phone maker warned of a slowdown in growth in the first quarter.

“The current economic environment and the ongoing evolution of wireless technologies have made it challenging to forecast short-term market developments,” the company said.

Nokia said it expects first-quarter sales growth of 25 to 30 percent, with earnings per share about even with the year-earlier quarter.

“This reflects somewhat slower-than-anticipated market growth during the first quarter and the company’s strategy of aggressively gaining market share, especially in mobile phones,” Nokia said.

Nokia’s cautious outlook follows a weak report from Swedish rival Ericsson (Nasdaq: ERICY). Ericsson said Friday that its first-quarter 2001 sales would also likely be slower than previously thought, and announced plans to outsource mobile-phone production.

Ericsson was trading at $11.50 early Tuesday, up 13 cents.

Despite the muted outlook for the coming months, Nokia chairman and chief executive officer Jorma Ollila called the company’s fourth-quarter and full-year 2000 results “nothing short of extraordinary.”

The Helsinki-based company said sales for the fourth quarter ended December 31st rose to 9.28 billion euros, from 6.37 billion in the same period a year earlier. Net profit advanced to 1.2 billion euros from 853 million. On Tuesday, one euro was equivalent to 92 cents in the U.S.

“We entered the year in a leadership role and again proved that we could convert that leadership into faster-than-market growth,” Ollila said. “Backed by the success of 2000, I feel confident that with our solid financial position, leading products, flexible operations and strong Nokia brand, we are well prepared for the future.”

Reports say Nokia is the largest manufacturer of mobile-phone handsets, followed by Motorola (NYSE: MOT) of Schaumburg, Illinois. Ericsson is pegged as No. 3.

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