Nokia to show health of mobile phone market

The strength of the mobile phone market will be shown next Thursday when Nokia reports its second quarter figures.

Analysts say they are cautiously optimistic about Nokia's prospects for the rest of the year after the company's profit warning last month.

The average forecast is for pre-tax profits of €1.2b (that's £746.3m), down from €1.5bn (or £884.1mn) a year earlier.

Pasi Pitkaejaervi, analyst at FIM Securities in Helsinki, says it's very unlikely Nokia will have a negative surprise for the markets because the company's expectations for the rest of the year are already so modest.

"Analysts already expect Nokia to give guidance about the slowdown of the market during the rest of this year, so it would be difficult for the company to surprise the market negatively," he says.

Mr Pitkaejaervi believes Nokia can maintain its long-term sales growth target of 25% to 30% this year and next year. "This is possible because Nokia will start to make deliveries of 3G networks at the end of this year.

"The large 3G network order Nokia won from VIAG Interkom on July 10 shows that Nokia will start to make deliveries of 3G networks over the next six months," he adds.

But Petri Korpineva, telecommunications analyst at Evli Securities in Helsinki, disagrees. He argues that Nokia will struggle to achieve its current long-term sales growth target.

Mr Korpineva reckons Nokia sales this year will only grow by around 5% because the market has shrunk, while the outlook for 2002 and 2003 is a realistic long-term sales growth target could be a little below 20%.