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Nokia Q3 below consensus, outlook soothes market

The world's top cell phone maker Nokia posted weaker-than-expected third-quarter sales and profits, but its market volume forecast soothed the worst fears of the impact of the global financial crisis.

The Finnish group reported third-quarter earnings per share of €0.29, down from €0.40 a year ago, missing the average forecast of €0.31 in a Reuters poll, but said it expected industry volumes to rise 10.5% to 1.26 billion phones in 2008, slightly above market consensus.

Having reported volume sales growth in excess of 20% for several quarters, this time Nokia managed only a rise of 5% to 117.8 million phones, missing analysts' average forecast, as sales fell in Europe and North America.

“The (financial) crisis ... is of course a reality that has added uncertainty and definitely can be seen in the third-quarter numbers as well,” Chief Executive Olli-Pekka Kallasvuo told CNBC television.

Handset makers have already started to feel the pinch from slowing economies, but booming demand from emerging markets has so far balanced out falling sales in Western Europe.

“I think people are breathing a sigh of relief that the phone market isn't going completely to pieces now in the fourth quarter,” said Hakan Wranne, analyst with Swedbank.

“With our scale, brand, improving product portfolio and low-cost structure, we believe Nokia is well positioned for the current times,” Nokia Chief Executive Olli-Pekka Kallasvuo said in a statement.

“Nokia's year-on-year volume drop in Europe raises concerns that the credit crunch maybe is affecting consumer demand for mobile phones in this region,” said CCS Insight analyst Geoff Blaber.

On September 5 Nokia warned that its third-quarter market share would fall and said it expected the mobile device market in 2008 to be hit by weak consumer confidence in many markets. It also cited tough competition in developing markets, its stronghold. (Reuters)