U.S. News

Nokia Shares hit 5-Year High on Raised Market Share Forecast


Nokia, the world's top mobile handset maker, lifted its global market share outlook for the second quarter to more than 36%, extending its lead over nearest rival Motorola.

Shares of Nokia rose to their highest level since 2002 on the news .

The Finnish firm has benefited from growing demand in emerging markets, and problems at Motorola, which posted a loss for January-March as it tried to cling to market share.

"This is positive news and tells markets that Motorola has problems and Nokia is gaining market share," said Carnegie analyst Janne Rantanen.

Nokia said it should have more than 36% of the global market in the April-to-June quarter, compared with its earlier forecast of 36%, and the higher market share would not be at the expense of profits.

"This isn't a trade-off between market share and profitability," Nokia's Chief Financial Officer Rick Simonson said at Reuters Global Technology, Media and Telecoms Summit in New York.

"It would be silly to push in additional products by dropping prices. That wouldn't make any sense," he added. "So basically, we've been pricing our products on a normal basis, normal as they go through their life cycle."

Better Future

Millions of Motorola phones sitting on the phone retailers shelves held back Nokia's market share at the start of the year, but the Finnish firm said the excess inventory in the market had
sufficiently cleared, boosting its sales in the quarter.

"The situation is turning closer to normal," Simonson said.

Nokia repeated it continues to target an increase in its market share in mobile devices for the full year 2007.

Analysts were upbeat after the forecast lift. "I think if they are already that advanced at this stage, then I think we can look forward to a very good third quarter and fourth quarter, I think it will get even better," said WestLB analyst Thomas Langer.

"I think it will be a home-run scenario for Nokia." With Motorola deciding at the start of 2007 to back away from the tightest competition in the low-end segment, Nokia has few rivals in its market stronghold, which is outgrowing the overall handset market.

Annual handset sales in developing markets have grown more than three times since 2002, compared to just 62% growth in developed ones, according to Strategy Analytics.

Some 65% of all handsets made this year will be sold in emerging markets.