Nokia unveils phones to beat gloom

Nokia phones on the assembly line, but who will buy them?

HANNOVER, Germany (CNN) -- Nokia has unveiled its latest range of mobile phones to the CeBIT technology fair in Hannover as it announces gloomy sales forecasts.

The world's biggest mobile phone maker said on Tuesday it expected to meet or top first quarter earnings estimates, although sales would be lower than expected due to weak market conditions.

First-quarter sales are expected to be slightly below the company's earlier forecast of a 6 to 10 percent decline, due to an anticipated 25 percent drop in sales at its network unit. However, the company said it expects sales at its key mobile phone unit to meet its previous forecast of a 3 to 7 percent decline.

It said earnings per share would be at the upper end of the 0.15 to 0.17 euros range, or better, but below the 0.22 euros from a year earlier.

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For the full year, Nokia has previously forecast 15 percent sales growth in both its network and handset units.

"Nokia has stretched itself too far... and it won't be able to live up to that," Per Lindberg, an analyst at Dresdner Kleinwort Wasserstein, told CNN.

"For networks, this [sales forecast] is not remotely attainable. And in handsets, it will be exceedingly challenging for them to attain," he said. "The gap between Nokia and its competitors is shrinking by the week."

Nokia's stock, which has risen more than 80 percent since September 11, fell 2.9 percent to 26.28 euros in early Helsinki trading on Tuesday. Its rivals, Ericsson of Sweden lost 4.5 percent to 47.00 crowns, France's Alcatel dipped 2.6 percent to 17.53 euros and German telecom giant Siemens fell 1.7 percent to 75.94 euros.

The Finnish giant is under pressure to match the new range of handsets already unveiled by rivals Motorola of the U.S. and Sony Ericsson Mobile Communications, which include colour screens and picture messaging.

The company's most recent model, a titanium-cased phone launched in February, was not well-received by investors.

Now it is pinning its hopes on multimedia messaging services (MMS), with sound and pictures, beyond plain text messaging.

Manufacturers are looking for new ways to attract customers by developing high-speed third-generation (3G) Internet handset services and improved access for broadband, which allows high quality video streaming.

Nokia, like its rivals, has seen its profits slip as telecoms carriers slashed spending and consumers held off buying replacement handsets. Despite claiming the lion's share of the market, it has not been immune to the effects of the sector's downturn.

The company's fourth quarter net income, including one-time expenses, declined to 450 million euros ($395 million), or 0.09 a share, from 1.2 billion, or 0.25 a share, in the year ago period. Sales dipped 5 percent to 8.8 billion.

Earnings, excluding charges, fell just 5 percent to 1.15 billion, or 0.24 a share. That number beat Nokia's forecast for earnings per share of between 0.18 and 0.20 euros ($0.16 and $0.18).

Many analysts believe Nokia is best placed to survive the market downturn. A study by research group Gartner Dataquest showed Nokia's market share rose to 36.9 percent in the fourth quarter, up from 33.4 for the previous three months.

At the end of 2001, the company had a 35 percent share of the market compared to 30.6 percent in 2000, Gartner said.

The market as a whole has not fared as well. Gartner said global mobile sales fell below 400 million in 2001 for the first time in the industry's history.