Nokia lowers sales target

Nokia hopes to stimulate consumer demand with new camcorder phone

HELSINKI, Finland (CNN) -- Nokia said it was sticking to its profit forecast as it banks on new colour screen and camera phones to boost consumer demand. But the company lowered it sales forecast for the third quarter.

The world's biggest mobile phone maker said on Thursday it expects earnings per share (EPS) at the upper end of its previous expectations of between 15 cents and 17 cents in the July-September quarter.

It expects sales to rise between 7.1 billion euros and 7.4 billion euros, below its previously stated revenue target of 7.6 billion euros. Analysts at investment bank Merrill Lynch had expected revenue of about 6.95 billion euros.

Mobile phone operators are delaying the rollout of high-speed networks as they cut their debt piles to counter sluggish global economic growth. Nokia said infrastructure sales would decline 5 percent in the third quarter. Sweden's Ericsson, the world's biggest maker of wireless equipment, expects a decline of 15 percent.

"Once again, the stellar performance of mobile phones has been marred by difficulties at Nokia networks," Richard Windsor, an analyst at Nomura, wrote in a note to investors.

MORE STORIES • MMS phones: Don't believe the hype  • Nokia takes another knock  • Nokia cuts handset sales target     QUICKVOTE Will mobile phone camcorders take off? Yes No View Results

But Windsor said the company is on track to meet its full-year profit target because of the handset unit.

"For the rest of 2002 we think that the magicians at Nokia mobile phones will be able to produce the goods to allow the company to make its estimates for the full year," he said.

Nokia has forecast full-year EPS of 0.79-0.81 euros, while Nomura predicts 2002 earnings of 0.81 euros.

Nokia's stock, which has fallen more than 50 percent this year, slipped 2.5 percent to 13.82 euros in mid-morning Helsinki trading. Rival Ericsson, which is heavily dependent on the infrastructure sales, slid 6.3 percent to 5.95 Swedish crowns.

Mobile phone companies are hoping handsets, which offer multimedia messaging, cameras and colour screens, to revive a stagnant market. Sony Ericsson's tiny T68i has already been a soar away success.

Global mobile phone sales fell for the first time last year and there is real concern the industry may not be able to sell 400 million units this year, as is the consensus, unless consumers start buying the newfangled phones.

Many consumers have been reluctant to replace existing phones with little in the way of new technology and the spectacularly poor performance of Web-enabled phones. Research group Gartner expects the global market to grow about five percent this year as phone prices fall and colour screen models hit the market.

Nokia launch on Friday the new 3650 mobile phone, which features a large colour display, ring tone composer, numerous games and has a built-in camcorder. It also unveiled the budget colour-screen phones, the 3510i, that should retail at about 200-300 euros without subsidies and attract the youth market.

"While we are encouraged by the potential of Nokia's product introductions (the 3650 in particular), we would remind you that the competition is not standing still. In Europe, for instance, we expect Sharp, Panasonic and Samsung to launch camera phones by year end," analysts at Merrill Lynch wrote in a note to investors before Tuesday's quarterly update.

Merrill Lunch has been skeptical for sometime that mobile phone sales can exceed 400 million units this year. Market research group Strategy Analytics, like its peer Gartner Dataquest, expects unit sales of around 420 million this year, but Merrill Lynch is forecasting 385 million handsets to be sold in 2002.

Nokia said on Tuesday it still sees handset sales of about 400 million unit worldwide.

The launch of new phones is crucial to maintain Nokia's dominant position. It has a markets share of about 36 percent, more than double that of its nearest rival Motorola of the United States.

Both models -- 3650 and 3510i --feature multimedia messaging (MMS) technology, which is currently being rolled out in Europe to enable consumers to send and receive pictures, sound clips and play games. They also include high-speed GPRS technology.