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Nokia Shares Lead Tech Rebound

October 20, 2000|From Bloomberg News

Nokia, the mobile-phone giant whose shares had helped lead the tech sector sharply lower since Sept. 1, provided one of the sparks for Thursday's big rally.

The Finnish company reported third-quarter earnings far above estimates, and forecast record earnings in the fourth quarter--predicting that more consumers will pick its colorful, feature-packed handsets over rivals' models.

Nokia shares (ticker symbol: NOK), which had plunged 36% from Sept. 1 through Wednesday, soared $8.13, or 27%, to $38.13 on the New York Stock Exchange. It was the stock's biggest one-day gain ever.

Nokia in July had warned that third-quarter earnings would fall from the second quarter's level, in part because the company expected consumers to delay phone purchases for new models.

But on Wednesday, Nokia said third-quarter profit rose 40% from a year earlier, to 892 million euros ($749 million at current exchange rates). Analysts had expected a 17% gain in profit year-over-year.

Sales leaped 50% to 7.6 billion euros ($6.4 billion).

The company had been planning to issue its report next week, but moved it up amid the plunge this week in tech stocks worldwide.

"There isn't anything bad in the [Nokia] report and it gives us one reason to start being more optimistic about the industry," said Frank Larsson, chief investment officer at Handelsbanken Funds in Stockholm, which manages about $4 billion in stocks.

Indeed, Nokia's report helped drive Texas Instruments (TXN) shares up $8.88 to $45.75. TI is a major supplier of chips for phones.

Nokia also reassured investors by reiterating its forecast that more than 400 million mobile phones will be sold this year worldwide. It expects 700 million people will have a cell phone at the end of the year, a number it sees rising to 1 billion users in 2002.

"Nokia is in better shape than ever to lead the market and technology development ahead," said Chief Executive Jorma Ollila in a statement released through the Helsinki stock exchange. "Our view of the market development fundamentals remains unchanged."

He said the company will post "record breaking" earnings in the current quarter as new models are rolled out, and reiterated that 2001 sales growth should be between 25% and 35%.


Clear Signal?

Shares of mobile-phone giant Nokia soared after the company reported third-quarter earnings far above expectations.


Weekly closes and latest for NOK on the NYSE

Thursday: $38.13, up $8.13

Source: Bloomberg News

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