Nokia on track to hit Q4 sales, earnings guidance

Nokia Corp is on track to hit the fourth quarter earnings and profits forecast it provided in its last financial results, according to chief executive officer Jorma Ollila.

"We feel pretty good about the guidance one month ago - about the fourth quarter guidance we gave a month ago," said Ollila in an address to the Nokia Capital Markets Day in New York.

"There is clearly improved visibility today."

With last month's third quarter results, Nokia said it was forecasting full year handset sales of 390 million, with fourth-quarter EPS coming in between 0.18 and 0.20 euro. It said it was also looking for revenue growth to bounce back to 25-35% range some time in 2002.

But the wireless giant today said it is not counting on any significant uptick in the US economy until at least the fourth quarter of next year.

"There seems some sort of consensus that the US economy will rebound after negative growth towards the end of next year - we can't be any more optimistic than that," he said.

And he said he could not see Europe avoiding a period of depressed economic activity.

"I don't think there is going to be any good news from Europe for at least the nine months," he said.

As for when investors can expect to see Nokia reaping the benefits of its heavy investment in third generation telephony, the Nokia CEO said he expects 3G services to gain momentum in the first half of 2003.

"3G services will emerge in significant forms and volumes in a number of countries in the first half of 2003, with revenue recognition from infrastructure products and through 3G phones from the second half of next year," he said.

Turning to the longer-term outlook for telecommuncations, Ollila poured scorn on arguments that the wireless business is going the way of the PC industry, where increased penetration and slowing demand have cut margins to the bone.

"We've all seen the PC (business) model and it would be very simplistic to conclude that the mobile business is similar," said Ollila.

"The fact is that mobile is continuing to become intelligent devices ... with the ease of use coming from the software and the hardware," which will protect the handset makers' margins.

This contrasts with the PC business where software is the only high-margin component in a typical desktop or notebook, he explained.