HELSINKI, Finland-Nokia Corp.’s stock jumped slightly following its solid fourth-quarter earnings report and positive outlook for the coming months. Indeed, the company managed to score sales at the top end of its estimates in both its core mobile-phone business, as well as its network infrastructure division.
Nokia’s fourth-quarter net sales decreased by 1 percent to $11.2 billion compared with the fourth quarter of 2002. However, Nokia continued to blame the weak dollar for some of its declines and said its group net sales would have been up by 8 percent year on year with constant currency rates. The company’s pro forma earnings per share grew 12 percent to 0.37 cents per share. The company stock was up slightly to around $21.22 per share following the news.
In Nokia’s mobile-phone business, which accounts for 80 percent of the company’s sales, Nokia reported net sales increasing 4 percent year on year to about $8.9 billion. The company said sales were driven in part by color screen and camera phones, welcome news to an industry working to increase replacement sales with advanced devices. Nokia said it sold a record 55.3 million phones in the quarter, up 20 percent year on year and giving Nokia what it estimates to be a 38-percent market share.
“We saw an increase in the average selling price of mobile phones compared with the third quarter as consumers upgraded to more advanced devices,” said Jorma Ollila, Nokia’s chairman and chief executive officer. “Half of Nokia’s handset volumes for the fourth quarter had color screens. Nokia also has the broadest camera-phone portfolio with 12 models announced by the end of 2003. We have been able to establish Series 60 as the leading mobile device platform, and the Nokia 6600 smart phone, which exemplifies the convergence trend, has been an instant commercial success after its sales debut in October.”
In Nokia’s network division, the company saw net sales decline 18 percent year on year to $2.2 billion in the fourth quarter. Pro forma operating profit in the division hit $262 million compared with $24 million in the fourth quarter of 2002, although the company said the level of profitability was not indicative of a trend.
“Nokia Networks positive Q4 pro forma result comes from stronger-than-expected year-end operator investments combined with a favorable product mix and the success of the decisive restructuring measures we took in early 2003,” Ollila said. “It also reflects the improved profitability of 3G W-CDMA as we have successfully addressed temporary quality issues experienced in the first part of 2003.”
For the first quarter, Nokia said net sales will increase in the range of 3 to 7 percent compared with the first quarter of 2003. The company said its earnings per share in the first quarter should be in the range of 21 and 24 cents per share.
In other Nokia news, the company reported board member Robert van Oordt will retire, and John Thornton will be selected as a new member. Thornton is a professor and director of global leadership at Tsinghua University in Beijing.
Nokia also introduced a new equity program, which the company said will increase performance orientation through a broad-based performance shares program, as well as reduce its number of stock options.
Finally, Nokia’s board also proposed a stock repurchase plan it said would pay a dividend of 38 cents per share.
