Nokia (NOK) shares are dropping after the company warned that Q4 sales and profits would be weaker than expected and that the mobile phone market would shrink next year. From Nokia’s release:
In the last few weeks, the global economic slowdown, combined with unprecedented currency volatility, has resulted in a sharp pull back in global consumer spending. The weaker consumer spending has impacted many industries, including the global mobile device market.
Nokia cut its 2008 industry-wide unit shipment estimate by 20 million to 1.24 billion mobile phones, including 330 million industry-wide shipments in Q4. Nokia expects to maintain its market share in Q4, but warns that the smaller market will ding its revenues and profits.
Nokia also now thinks global mobile phone shipments will be down next year, impacted by the continuing overall economic slowdown.
Investors are pulling out of mobile stocks this morning, including Nokia, which was down 12% in pre-market trading, Qualcomm (QCOM), down 4.85%, Apple (AAPL), down 2.5%, and Research In Motion (RIMM), down 4.3%.
We think a global slowdown will affect all levels of the mobile industry, from high-end smartphones to emerging markets. Which means Nokia is perhaps most at risk here, because they are by far the world’s biggest mobile phone company, spread the most broadly across the industry. Meanwhile, we think companies focusing exclusively on the rapidly growing smartphone market — such as RIM and Apple — could be better insulated. (Especially Apple, which also sells computers and MP3 players.)
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