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Nokia forecasts flat sales in third quarter

Despite strong consumer demand, third-quarter sales at Nokia are expected be flat or slightly lower compared with the same period last year due to the depreciation of the US dollar's value.

The company expects pro-forma earnings per share to be between 15 cents to 17 cents compared with 18 cents for the third quarter of 2002.

Nokia said it still expected global handset volume to rise 10% this year from 405 million units in 2002, though those sales will mainly be of cheaper handsets.

"We have made great progress in all markets," said Olli-Pekka Kallasvuo, chief financial officer of Nokia.

Kallasvuo highlighted expected third-quarter growth in the US. "The progress we've made in the US in CDMA [Code Division Multiple Access] and in other markets... has been very good," he said.

Nokia is also experiencing sales growth in Europe and Africa, "positive trends in China" due in large part to the tri-band Nokia 6108 handset launched in May, and progress in India, Kallasvuo said.

Nokia claims to hold 39% of the market, selling more mobile handsets than competitors Motorola, Samsung Electronics and Siemens combined.

"We are very happy with market share progress [in the third quarter]. We are gaining in most of the markets, but it is premature to comment on if we will reach the 40% mark," Kallasvuo said.

Nokia touted the progress being made on products using 3G technology, saying that Nokia was seeing an evolution in overall demand for 3G products as well as progress in developing the services for the 3G handsets.

"The maturity of the technology has made great progress and so have we," Kallasvuo said. "But there still is a great amount of work in the industry as a whole to be done on the interoperability issue."

Nokia Networks, the division that sells mobile phone networks to operators, expects third-quarter sales to decline by between 15% and 20% year on year, though that market appears to be stabilising.

Nokia's restructuring of the division in response to the industry problem of growing debt and stagnate sales, is continuing on plan. "

"That market we feel has bottomed, but it remains to be seen how and at what pace it will grow again," Kallasvuo said.

Laura Rohde writes for IDG News Service


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