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Investors fear Nokia collapse
« on: Jun 03, 2011, 04:14 PM »
The slide in the value of the Nokia stock continued on the New York Stock Exchange on Wednesday; share price down further in early Helsinki trading on Friday.

The mobile phone manufacturer Nokia’s share price continued to slide in New York on Wednesday after the company had warned on Tuesday that its second-quarter sales and margins would be much lower than expected.

Never before in the current millennium has Nokia’s future looked as uncertain as today, analysts feel. The demand for Nokia handsets is eroding so rapidly that the company is unable to estimate its profit development for the coming autumn.

In recent times, the company’s share price dropped by almost 5 per cent on the New York Stock Exchange, but in Helsinki the share price declined by less than 1 per cent from its Tuesday close, when it had shed more than 17% of its value in heavy trading.

Tim Boddy, an analyst at Goldman Sachs International, estimates that the rapid fall in Nokia’s market share is bound to endanger the company’s economies of scale, particularly when it comes to the delivery of its products.

This can make it difficult to strengthen the company’s market position with new phones based on Microsoft’s Windows software.

According to Boddy, Nokia’s Windows phones will not be available in several price categories any sooner than by the middle of next year. If this estimate holds true, Nokia’s current stumble could become more critical.

Because of the anticipated phase-out, investors do not believe that a reform of the Symbian platform could prevent the decline in the demand for Nokia phones from continuing.

Nomura analyst Stuart Jeffrey also estimates that Nokia ’s difficulties are hardly likely to ease this year.

Jeffrey predicted earlier that Nokia’s earnings per share would be reduced to EUR 0.54 this year.

On Wednesday, he downgraded his forecast by 15 per cent to EUR 0.46.

In 2010, Nokia’s EPS stood at EUR 0.61.

One reason for the continued plunge in Nokia’s share price in New York on Wednesday was probably the fact that some investors are short selling, hoping to profit from a decline in the price of shares between the sale and the repurchase.
”As the company’s situation is very unclear, speculators can make hay”, says Timo Ritakallio, the Deputy CEO of the mutual pension insurance company Ilmarinen, which is the largest Finnish owner of Nokia.

Source: Helsinki Sanomat

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Investors fear Nokia collapse
« on: Jun 03, 2011, 04:14 PM »