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Tuesday, 12 March, 2002, 17:14 GMT
Nokia sees weaker sales
New Nokia mobiles
Nokia hopes its new mobile handsets will drive demand
The world's top mobile phone maker Nokia has said it is on course to meet its profit targets for the January to March period.

But the Finnish firm warned that sales at the group are set to disappoint, coming in below its earlier forecasted drop of 6-10%.

Nokia shares slipped 6.5% as investors digested the company's statement, and the news hit telecoms stocks across Europe.

The sector took another blow when the US telecoms equipment maker Lucent cut its revenue forecasts and put back the date for when it expects to return to profitability.

Recovery delayed

In January, Nokia posted better than expected profits for the last three months of 2001 and forecast "improving conditions" for the coming year.

But the latest trading update suggests the telecoms sector is still struggling to pull itself out of the doldrums.

"Net sales for the first quarter are expected to be slightly lower than anticipated, but higher than expected profitability is being driven by Nokia's core strengths," the mobile phone maker said in a statement.

Sales at Nokia's mobile phones unit are set to be 3-7% lower for the January to March period, which is in line with forecasts.

But sales at its Networks unit are expected to be down by a quarter.

New models

The news overshadowed the unveiling of five new Nokia handsets at the CeBIT technology fair in Hanover, Germany, including the company's first colour screen phone.

Phone makers are hoping that colour screens on mobiles will help boost demand for the new generation of handsets, which will offer a greater range of services.

Nokia's share price fell by 6.7%, and in London, Vodafone shares dropped 1.25p to 139p, while rival operator mmO2 closed 3p down at 65.25p.

Lucent disappoints

Telecoms shares were dealt a further blow by news from the US telecoms equipment maker Lucent Technologies that it was cutting its earnings forecasts.

It said sales would grow by less than 10% during the first quarter, despite predicting growth of 10-15% only last month.

The company said it had been hit by phone companies cutting back their spending plans.

The news also hit shares in the French telecoms equipment maker Alcatel and its shares fell 4.7% to close at 17.16 euros.

Tapio Hedman, Nokia
"2002 will be a year of renewal for the whole industry and Nokia."
See also:

25 Jan 02 | Business
Signs of hope for mobile makers
24 Jan 02 | Business
Nokia sets up for big year
23 Jan 02 | Business
Carphone Warehouse warns on profits
23 Jan 02 | Business
Siemens returns to profitability
23 Jan 02 | Business
Motorola losses mount
31 Dec 01 | Business
UK mobile phone sales slump
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