By Ben King, 18 April 2002 17:35
NEWS Nokia spilled gloom into the mobile sector by cutting its sales forecasts, cutting jobs and announcing falling sales. First quarter sales for the company's handset business fell seven per cent, but margins rose to 22.2 per cent from 20.7 per cent for the same quarter last year. Nokia said preliminary research showed its market share stable at 37 per cent, giving it a good chance to reach its target of 40 per cent, though it cut its forecasts for the whole year's sales from 420 million to 440 million to 400 million to 420 million. The networks division was hit by a 29 per cent drop in sales, worse that expected. Second quarter sales are predicted to fall another 5 to 10 per cent before a 15 per cent rebound next year. Nokia's pre-tax profits dropped to E1.31bn (£800m) from E1.48bn (£909m). 625 jobs are to go at Nokia's Texas plant, the company said. Nokia chief executive Jorma Ollila said: "There's no doubt the wireless industry continues to face a difficult market situation. We are beginning to see an improvement but at a slower rate than earlier anticipated." Nokia has bet heavily on multimedia messaging services to drive future handset sales, but if this fails to excite customers enough to make them buy new phones, it won't not be enough to beat off competition from Ericsson, Motorola, Sony Ericsson and Samsung, eager to eat into its market share. Gartner analyst Ben Wood commented: "Nokia have once again identified the new messaging technology, MMS as a key driver for growth, but as Gartner do not believe this technology will gain significant traction with end users until the start of 2003 we have an application gap for 2002."
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