Nokia Corp.’s stock took a hit Thursday after the company posted strong second-quarter financial results followed by a warning about projected third-quarter results.
“We anticipate Nokia’s earnings per share in the third quarter to be at least equal to the level achieved in the third quarter of 1999,” Jorma Ollila, chairman and chief executive officer of Nokia said. “However, due to the timing of the new product introductions as well as seasonality, they are projected to be lower than in the second quarter of this year.”
That message sent Nokia’s stock tumbling $14.56 per share, with more than 120 million shares trading hands, to close Thursday at $41.25.
Ollila noted that he expects fourth-quarter results to exceed second-quarter numbers.
Investment firms adjusted their outlook on Nokia’s stock following the news, with Bear Stearns & Co., Morgan Stanley Dean Witter, Banc of America Securities and Donaldson, Lufkin & Jenrette all downgrading the stock.
Credit Suisse First Boston, which lowered its third-quarter estimates for Nokia by 4 cents per share due to pressure on margins, said it expects Nokia to increase spending during the third quarter on research and development for third-generation developments and expects the company will incur additional selling expenses to roll out new handset models.
“Overall, we remain bullish on Nokia and the sector as a whole,” said Marc Cabi, managing director of Credit Suisse First Boston. “We reiterate our Strong Buy and see the sell-off as a buying opportunity to build a position in the handset leader.”
Cabi noted that Credit Suisse First Boston was leaving its 2001 estimates for Nokia unchanged.
Nokia posted a 55-percent increase in net sales during the second quarter compared with the second quarter of 1999, from $4.2 billion to $6.5 billion.
Nokia’s second-quarter net profits jumped 64 percent from $546.9 million last year, to $895.3 million this year. Earnings per diluted share followed suit, climbing from a return of 11 cents per share for the second quarter last year, to a return of 19 cents per share this year, 1 cent ahead of estimates.
“Overall growth prospects for Nokia in the later part of the year, as well as for the long term, remain unchanged, stimulated by the strong mobile communications market,” Ollila said. “We expect competition to remain fierce, making it necessary to continuously improve efficiency and master rapid growth without compromising customer satisfaction.”
