Friday, August 3, 2007

UPDATE 5-Good cellphone margins lift Nokia Q2, shares jump

By Tarmo Virki
HELSINKI, Aug 2 (Reuters) - A robust appetite for new phones in emerging markets boosted second-quarter sales and profits at Nokia (NOK1V.HE: Quote, Profile , Research), the world's top cellphone maker, and hoisted its shares to their highest level in more than five years.
Nokia said its underlying second-quarter earnings per share rose 39 percent from a year ago to 0.32 euros, compared with expectations of 0.25 euros in a Reuters poll, when adjusted for the performance of its networks venture with Siemens (SIEGn.DE: Quote, Profile , Research).
Shares in Nokia soared 9 percent to 22.50 euros, levels they last saw in early 2002, pulling European indexes higher. Shares in Nokia are up 44 percent so far this year.
"We are kind of hitting on all cylinders," Nokia's Chief Financial Officer Rick Simonson told a conference call.
Operating profit margins at Nokia's handset units rose to 20.9 percent, their highest level since end-2003 and well above analysts' average forecast of 16.9 percent.
"I think the investment story has now even improved if Nokia is to remain at such margin levels," said Marko Alaraatikka, Portfolio Manager at Evli Funds in Helsinki. "Margins were so strong thanks to Nokia's economies of scale .... as well as due to Motorola's weakness."