Nokia stumbles as camera phones fail to do business

22 Jan 2003

The world’s leading mobile phone maker, Nokia, may be forced to cut its growth forecasts when it publishes its fourth quarter results tomorrow, after retail figures showed that the much hyped colour-screen handsets with built-in mobile phones, failed to do the business with shoppers globally this Christmas.

The company was also hurt by a profit warning from a key supplier as well as by comments from Korean rival Samsung, which said fourth-quarter handset sales fell from the previous quarter.

In addition last week, Nokia stock fell 4.1pc on the NASDAQ.

The retail research showed that Europe in particular bought fewer camera phones than expected in the fourth quarter, opting instead for cheap basic-function phones.

Better promotion is expected to save the North American market from such bad news.

Less-than-brisk consumer demand may affect Nokia’s first-quarter sales more than its fourth as retailers enter the year with unsold stock.

Industry experts and handset makers, including Nokia, predict a 10pc sales growth to around four million handsets around the world.

Nokia has 40pc of the global market share in handset mobile phones.

Tomorrow’s fourth-quarter results are expected to show a pre-tax profit of €1.62bn – 1pc lower than the same period in 2001, on sales of €8.88bn.

Last month the Finnish company warned that fourth-quarter sales would not be as strong as expected because a concentration on selling cheaper phones meant lower average prices.

Danske Euquities said: “Although this news might be the first warning that fourth quarter market growth will fall short of expectations, Nokia may again compensate with aggressive attacks on the low end of the market to save its own volumes.”

The handset market globally has remained stagnant for the past two years. Recovery is not expected until consumers start replacing their old models for more expensive gadget- rich alternatives.

In Ireland, the two major networks, O2 and Vodafone, have yet to release sales figures for camera phones over the Christmas peak but both said sales were in line with expectations.

Vodafone, however, named the Sharp GX-10 as its camera phone of choice when it launched its Vodafone Live! media messaging campaign last year. Last week, Vodafone slashed the post-paid price of the Nokia 7650 – from €379 to €199 – presumably to stimulate sales. In contrast, the post-paid price of the GX-10 has remained constant at €299. With Ireland’s largest network promoting the Sharp machine and heavily discounting the Nokia, it would come as no surprise if Nokia were not meeting its sales targets here.

By Suzanne Byrne and Brian Skelly