Nokia sales prompt telecoms slump

Nokia: Sales of 128 million handsets disappointed

European telecoms stocks have slumped after Nokia, the world's biggest mobile phone maker, reported weaker than expected sales for 2000.

Shares in the Finnish firm were the heaviest hit, dropping more than 19% at one point, but the falls were across the board, affecting handset makers, equipment suppliers and network operators.

Swedish rival Ericsson lost more than 4%, Motorola dipped 2% and France's Alcatel 1%.

In London, Vodafone, the world's largest mobile phone network operator, closed 3.4% down, reaching its lowest closing level since May 1999. France Telecom, which is selling up to 15% of its Orange wireless arm, ended 4% lower in Paris.

Nokia ended the day 9% lower at 41 euros.

Deflating expectations

Nokia said it sold more than 128 million phones in 2000, nearly two thirds higher than the year before.

But analysts were disappointed, having forecast sales of 135 million to 140 million units.

They said they suspected that Nokia, by pre-announcing the figures, was attempting to deflate expectations for its full-year financial results - due to be published on 30 January - and limit any share price drop.

Some analysts said Tuesday's steep fall in the share price was an over-reaction, reflecting how nervous investors are.

"It is tough to tell what the situation is given we only have one figure, but where the share is now, the reaction looks to be a little overdone," said Ed Protheroe, European technology portfolio manager at Aberdeen Asset Management.

"But given the reputation of the company and its premium valuation, it cannot afford to disappoint. Given the current (volatile) market conditions, the reaction is not surprising," he added.

Motorola and Ericsson problems

Until Tuesday, Nokia's share price had held up relatively well, the company having reported solid third-quarter results in October and pleased analysts with an upbeat growth forecast issued in December.

US rival Motorola - the world's number two handset maker - has already warned its fourth-quarter earnings would be up to 40% lower than previously expected.

It is due to report on Wednesday.

Third-placed player Ericsson, which has had well-publicised problems at its handset division, will issue its results on 26 January.

Siemens: 'No change'

Germany's Siemens, which has increased its market share in recent months at the expense of Ericsson and Motorola, said it saw no reason to alter its forecast for sales of more than 48 million mobile phones in 2000.

Nokia said its preliminary estimates put global mobile phone sales at about 405 million in 2000. This gave the firm a market share of 31.6%, slightly above that recently given by a market research group.

Nokia also said it estimated there were 700 million mobile phone users worldwide by the end of 2000, representing global penetration of about 12%.