Nokia (NOK) reported a mostly in-line Q1, but shares are down 10% on the Helsinki exchange (and in pre-market trading here) after the company said it expected the worldwide mobile phone market to decline in revenue this year versus 2007, despite 10% y/y growth in units shipped. MarketWatch:
Nokia Corp., the world’s largest maker of mobile phones, on Thursday said first-quarter net profit rose 25% to 1.22 billion euros, or 0.32 euro a share, from 979 million euros, or 0.25 euro a share, in the year-earlier quarter. Earnings excluding one-time items came in at 0.38 euro a share. Consensus expectations were for earnings of 0.37 euro a share, according to a survey of 30 analysts conducted by FactSet. Sales rose 28% to 12.7 billion euros, in line with expectations. The Finnish firm shipped 115.5 million phones in the quarter, up 27% year-on-year, giving it a market share of 39%. The average selling price of a Nokia phone fell to 79 euros from 83 euros in the fourth quarter.
But here’s what’s hammering their stock: (Emphasis ours.)
“Nokia expects the mobile device market to decline in value in Euro terms in 2008, compared to 2007. The change from our previous estimate of value growth for this market primarily reflects the negative impact of the recently weakened US dollar, the general economic slowdown in the US, and possibly going forward some economic slowdown in Europe.”
The company expects average phone prices to continue to drop as emerging markets make up a big chunk of its growth.
Update: Not much going on on the conference call. A few highlights:
- As expected, Western Europe growth weak, good growth in Russia and Eurasian countries.
- China market share flat despite not participating in the super-low end of the market.
- Share in Latin America up sequentially, est. over 40%.
- High-end smartphones doing well, especially N95, which sold 3 million and was the no. 1 profit contributor. The downside: This is Apple’s (AAPL) sweet spot, which will become more competitive as it rolls deeper into Europe, Asia, and gets 3G network access.
- How will they compete with Apple? Secret new smartphones that haven’t been shown off yet, plus “services” like games, music store, maps, photo sharing.
- Ramping up new CDMA business model to take share in the U.S., etc.
- No noticed change in “replacement rates” — how frequently existing subscribers buy new phones. (Slowing rates would be bad news.)
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