Nokia Calls Bottom For mobile phone Industry

Nokia just reported a terrible Q1, during which sales plunged more than 25% year-over-year and profits fell 90%. Yet Nokia (NOK) shares are up 9% in pre-market trading. Why?

Because the world’s largest mobile phone company effectively called the bottom of the mobile phone market, which is excellent news. Nokia says it still expects the industry to shrink 10% in 2009 over last year, but that the worst damage is done.

The company expects the decline to be worse in the first half of the year than the second half, and it expects the second quarter to be flat or slightly up from the first quarter. So, in short, the worst could be over. That may prove to be wishful thinking, but it’s good enough for now.

Meanwhile, with carriers drawing down inventory to lower-than-normal levels, shipments fell off a cliff in Q1. Nokia shipped 93 million phones during the quarter, down 19% year-over-year and down 18% from Q4. And sales and profits dove, missing expectations.

WSJ: The world’s largest mobile-phone maker said net profit in the three months ended March 31 plummeted to €122 million ($161.3 million) from €1.22 billion last year, missing analysts’ expectations for €306 million. Sales fell to €9.27 billion from €12.66 billion a year earlier, below expectations of €9.80 billion.

Nokia still has several challenges: Figuring out the U.S. market, where it’s barely relevant; competing better against more advanced smartphones from Apple (AAPL) and others; and getting more out of its Nokia Siemens Networks gear joint-venture. (Which is now forecasting worse-than-expected industry declines this year.)

But at least today, investors feel better than they did yesterday.

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