Helsinki/Amsterdam: Nokia, the world's top cell phone maker, cut its profit margin forecasts but remained more upbeat than analysts as it unveiled thinner models to face stiff competition and slower market growth.
Nokia joined market analysts in forecasting slower growth for the global mobile phone market in 2007, expecting unit shipments to grow by up to 10 per cent from this year, compared with a forecast of just over 10 per cent issued by researchers Gartner last week.
"We expect the volume growth in 2007 to be above 15 per cent in Asia Pacific, China, and Middle East and Africa, and below 10 per cent in Europe, Latin America and North America," Nokia said in a statement.
In 2006, mobile phone shipments are set to rise 21 per cent, according to Gartner. Nokia cut its target for its group operating profit margin for the next one to two years to 15 per cent from an earlier 17 per cent, citing rising exposure to the infrastructure business after merging its networks unit with Siemens from the start of 2007. "It is not really that bad news.
The consensus (analyst forecast) was 13.5 per cent for 2007 and 13.7 per cent for 2008 anyway," said Cheuvreux analyst Peter Knox. "What I find slightly disappointing is the market growth forecast for next year of 'up to' 10 per cent." Shares in Nokia fell on the news and were 1.9 per cent lower at 15.22 euros by 1540 GMT.
The DJ Stoxx European technology sector index was down 0.8 per cent.
Nokia said it aimed to increase its market share in the mobile phone business in 2007 from its current global share of close to 35 per cent. "It's important that it will not be the low-end only. In the mid-range I see a lot of upside, because of our lower market share there," Nokia Chief Executive Olli-Pekka Kallasvuo said.
Nokia Mobile Phones unit head Kai Oistamo also showed a new ultra-thin, low-priced phone, code-named "Barracuda", that is set to start selling in 2007.
Due to strong competition and above-average sales growth of cheap phones for emerging markets, the company also trimmed its operating profit margin for its two biggest units: Mobile Phones and Multimedia.
It now expects a 17 per cent operating profit margin for the units for the next one to two years, compared with an earlier 17-18 per cent target.
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