Nokia revised down its forecast for handset sales Dec. 4, yet company shares rose some 5% in New York and Helsinki trading. Why? One reason was that investors were bracing for worse, says analyst Richard Windsor of Nomura Securities in London. “Things are not as bad as some had feared,” he wrote in a note to investors.
The news wasn’t exactly good. Nokia backed off its previous forecast for industry-wide sales of 330 million devices in the fourth quarter of 2008. Overall, global handset sales are likely to drop some 5% in 2009 vs. 2008 as retailers clear out inventory, the company said. In addition, Nokia said it could no longer stand by its earlier vow to increase global market share from the third-quarter level of 38%.
Longer term, though, there are reasons why Nokia remains a good bet. As the company noted in the Dec. 4 statement, the number of mobile subscriptions worldwide is expected to cross the 4 billion mark in the first quarter of 2009. Mobile is still a growth business in macro terms.
While Nokia will take some lumps in the downturn, it has the resources to continue to invest in research and development and in marketing. Smaller competitors will have a more difficult time doing so, and a few may disappear from the market. “In tough times the people who are stronger and able to invest are better off than weaker competitors,” Nokia CEO Olli-Pekka Kallasvuo said in an interview in Barcelona on Dec. 2, before release of the revised forecast. “Of course we intend to use our position to improve our position in the market.”
Source : http://www.businessweek.com
