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- MediaGuardian,
- Tuesday June 12, 2001
Mobile phone manufacturer Nokia has stunned the technology sector with a surprise profit warning.
The Finnish group's shares plunged 20% after it said sales growth for April to June would fall below 10%, rather than the 20% it had expected.
Jorma Ollila, the chief executive of the world's largest mobile phone maker, said a downturn in demand had sparked the warning.
"We believe this slowdown is a result of a general market deterioration - driven by economic uncertainty, the ongoing technology transition and less aggressive marketing by the operators," he said.
Nokia was thought to be immune from the downturn in the mobile phone market after rivals Ericsson and Motorola issued dire profit warnings earlier this year.
Mr Ollila's reference to 3G networks underlines the vicious circle that has trapped mobile phone companies and telecoms equipment makers.
European wireless companies have spent billions of pounds on licences for next-generation networks, but technical difficulties and a lack of development money have stalled orders for handsets.
Today's news will do little to reassure investors that there will be a short-term improvement in the depressed telecoms sector, which is saddled with massive debts thanks to the craze in 3G licences.
Nokia also warned it was examining the outlook for the rest of the year, as the market slowdown is unlikely to stop before then.
It said mobile phone sales would show only modest growth this year, after selling 405m unites last year.
The economic slowdown in the US is underpinning the deterioration of the telecoms equipment market, and Nokia admitted the malaise is spreading to Europe.
"The general economic slowdown in the US has recently shown signs of extending to other regions and to the wireless communications industry as a whole," Nokia said in a statement.
