» Nokia Makes Ambitious Predictions; Analysts SkepticalTelecommunications Industry News

Telecom News Editorials Reports Glossary

Nokia Makes Ambitious Predictions; Analysts Skeptical

4:00 am on December 12, 2005 | Category: Business, Mobile Devices

Despite overwhelmingly optimistic performance estimates from Nokia, market analysis firm, Dresdner Kleinwort Wasserstein has chosen to maintain a â€œsellâ€ recommendation on the companyâ€™s stock.

In a research note, the firm explained its belief that it would be hard for Nokia to achieve their target of a 17% profit margin, due to low return-on-sales figures. Although the global handset market is widely expected to improve in 2006, shrinking profits per sale could pose a problem for Nokia.

Nokia CFO, Rick Simonson on the other hand, tells quite a different story. He admits that a growing portion of sales are in the low-end phone market (< e50), but claims that this is due to the companyâ€™s growing dominance in emerging markets. He believes that cornering quickly growing markets, such as China, Nokia can increase net sales and profits in the long term.

By making these types of continual optimistic statements, Nokia executives have certainly convinced themselves that they can hold their position as the worldâ€™s top handset maker, while further boosting their market share. But convincing themselves isnâ€™t going to boost stock prices. The tricky part will be proving their worth to shareholders and market analysts.

Telecommunications Industry News