By Malin Rising, Associated Press Writer
STOCKHOLM (AP) — Analysts will look for signs of a pickup in global mobile phone sales as the world's largest handset maker, Nokia Corp. reports second-quarter earnings on Thursday. Still, profits are expected to fall sharply year-on-year.
OVERVIEW: In the last two quarters Nokia has been hit by falling demand and low handset prices that have followed the global financial crisis, but the worst may be over.
In May it said it would lay off 170 workers in production and logistics and offer buyouts to 320 employees at a Finnish manufacturing plant after a similar program for 1,000 global Nokia employees proved popular.
Earlier this year, it announced more than 2,400 job cuts globally and temporary layoffs of 2,500 workers in Finland.
The company aims to slash costs at its handset unit by euro700 million ($920 million) annually, and has said it will continue to look for opportunities to cut costs across all business areas.
BY THE NUMBERS: A survey of 40 analysts by SME Direkt shows Nokia is expected to report a 70 percent fall in net profit to euro328 million. The survey, published in Dagens Nyheter newspaper, said sales are expected to fall by 23 percent to euro10.1 billion.
WHAT'S AHEAD: In the first quarter, Nokia sold 93 million mobile phones and held 37 percent of the global mobile phone market. In the report it said it aimed to boost its market share this year, while it expects the mobile device market to shrink by 10 percent. It has also said it expects the network infrastructure market to contract by 10 percent in 2009.
Nokia has said it expects second-quarter volumes to remain at the same level as in the first quarter, or somewhat higher.
In a May interview, chief executive Olli-Pekka Kallasvuo said Nokia plans to expand sales by offering more so-called smartphones for lower prices.
"That which is called mobile computers or smartphones is in demand all over the world. Our thinking is to expand by offering smartphones for lower prices to reach more consumers," Kallasvuo told Swedish newspaper Dagens Nyheter.
ANALYST TAKE: Greger Johansson, an analyst at research firm Redeye, expects underlying profits to fall in the second quarter. "Nokia and the entire telecommunications industry are under a lot of pressure," he says. However, he says Nokia probably saw its worst result in the first quarter. "It will gradually get better from now on," he says. "I think they will gain a little bit of market share in the second quarter, but we are talking about 10ths of a percent."
STOCK PERFORMANCE: In April, Nokia's share price rose nearly 10 percent to euro11.08 as first-quarter handset sales came in better than expected and the company reiterated its market outlook. Since then the share price has remained stable between euro10 and euro11.5, avoiding the sharp fluctuations experienced earlier in the year when the share dipped to euro6.9. This week, Nokia has been trading on the Helsinki Stock Exchange at between euro10.03 and 10.5. On Tuesday, Nokia stock closed down 0.5 percent at euro10.42 ($14.54).