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Nokia cuts earnings forecast
©Associated Press
© St. Petersburg Times, HELSINKI, Finland -- Citing a slowdown in the U.S. economy, Nokia, the world's largest cell phone manufacturer, said Tuesday its earnings and revenue growth will be lower than expected in the current quarter. The announcement sent prices tumbling, as the Dow Jones Industrial Average dropped as much as 133 points before a late rally. The Dow finished the day up 26.29 at 10,948.38. In trading on the New York Stock Exchange, Nokia's U.S. shares were off $5.45, or 19 percent, at $23.26. "We have recently seen a weakening in market conditions to levels below our earlier estimates," said Jorma Ollila, Nokia's chief executive. Nokia said the slowdown has spread from the United States, its biggest market, to the rest of the world. "We believe that this slowdown is a result of a general market deterioration -- driven by economic uncertainty, the ongoing technology transition and less aggressive marketing by the operators," Ollila said in a statement. Unlike its main rivals, Sweden's Ericsson and U.S.-based Motorola, Nokia largely has avoided major layoffs and continued to churn out record profits. But in April, Nokia also showed signs that it was feeling the pinch caused by a global economic downturn. It said its operating profit margin this year would be "in the high teens" instead of the earlier predictions of 25 percent to 30 percent. On Tuesday, Nokia lowered its expectations for revenue growth from the 20 percent predicted in April to less than 10 percent growth for the three-month period ending June 30. Stocks initially fell and continued to slide after the Nokia warning, which exacerbated investors' fears about a delayed rebound in the economy and, in turn, earnings. "It brings into question whether the economy is really going to turn around in the second half," said Ricky Harrington, a technical analyst for Wachovia Securities in Charlotte, N.C., of Nokia's announcement. Eventually, stocks turned mixed in late trading, the result of bargain hunting after nearly three days of sharp declines. The Nasdaq Composite Index slipped 0.83 to 2,169.95, registering its third -- albeit small -- consecutive loss. The Standard & Poor's 500 index inched up 1.46 to 1,255.85.
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From the Times Business report
From the AP
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