15 November 2008

Weekend reading:
Nokia sees cellphone market falling in 2009

Top cellphone maker Nokia said the world's mobile phone market would be weaker than it expected in the fourth quarter due to the economic slowdown and was set to fall further in 2009.

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. The mobile device market has also been negatively impacted by the more limited availability of credit, which has limited the purchasing ability of some of our trade customers.

As a result of the rapid change in global consumer spending, which has
impacted the mobile device market, Nokia now expects that the industry mobile device volumes will be lower in the fourth quarter 2008 than previously expected. We now estimate fourth quarter 2008 industry mobile device volumes will be approximately 330 million.

This is sequentially up from the estimated 310 million in the third quarter of 2008. This would result in a current estimate of industry mobile volume of 1.24 billion in 2008, instead of the earlier estimated 1.26 billion units, up from 1.14 billion units Nokia estimated for 2007.

Nokia continues to expect its mobile device market share in the fourth quarter 2008 to be at the same level or slightly up, sequentially. This expectation is based on our current view, external market data and the
overall competitiveness of our device portfolio.

Nokia expects that Devices & Services sales and profitability in the fourth quarter 2008 will be negatively impacted, due to the aforementioned factors.

Shares in Nokia fell more than 7 percent to 9.56 euros, its lowest level since August 2004. "The warning dovetails well with Qualcomm and Intel - rapid recent deterioration of consumer electronics demand," said analyst Tero Kuittinen at Global Crown Capital.

The euro zone went into recession officially on Friday, and economic growth is slowing around the world.

Nokia said it now expects fourth-quarter industry mobile device volumes to be approximately 330 million, well below the 346 million average market forecast in a Reuters poll earlier this month.

The phone maker said it expected its market share in the fourth quarter to be at the same level or slightly up from the third quarter but that sales and profitability in key devices and services would be hurt.

Nokia said its schedule was similar to that for many other phones, adding that customizing the phone's software for operators in other markets would take some time.