ROUNDUP Nokia prioritises profits over market share

ROUNDUP Nokia prioritises profits over market share

	Published : Thu, 19 Apr 2007 18:39 By : Agencies Print this Story

HELSINKI (Thomson Financial) - Nokia today soothed investors fearful that it has been prioritising handset market share ahead of profits by unveiling improved margins for the first quarter and saying it would continue to 'maximise the bottom line'.

While quarterly pretax earnings fell year-on-year, the Finnish group's diluted EPS excluding restructuring charges rose a cent to 0.26 eur, with the gross margin growing sequentially thanks in part to robust sales of 3G phones.

'The basic message is that Nokia has been able to improve gross margins even though they kept market share and average selling prices (ASPs) stable,' said Jari Honko at eQ Bank in Helsinki.

That was enough for the market, as Nokia shares climbed to a 11-month high of 18.16 eur. It was also enough for Nomura to cut its stance on the stock to 'neutral' from 'buy', saying the company's valuation now looks full.

With its market share growing to 36 pct from 35 pct a year earlier, Nokia widened its lead over nearest rival Motorola during the quarter.

But analysts had been expecting a bigger jump in its market share, in the light of the difficult patch the US group is going through.

Motorola said yesterday its market share had fallen several percentage points to below 18 pct, and analysts were predicting that most of the share it lost was ceded to Nokia.

FIM's Pasi Vaisanen said that does not appear to be the case, noting that Sony Ericsson, whose numbers are published tomorrow, may be 'the real winner in market share' during the first quarter.

Nokia's ASP remained unchanged from the fourth quarter at 89 eur, which dealers said was a big relief to the market. Analysts' expectations for ASPs had centred on 88.5 eur, with the most bearish forecasting them to fall as low as 86 eur on worries about alleged stiff price competition in key markets.

james.etheridge@thomson.com

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