Nokia cuts profitability target, sees slower 2007

Nokia said its expects global mobile phone unit shipments to grow by as much as 10 percent in 2007 from this year, compared with a forecast of just over 10 percentclick me issued by researchers Gartner last week, which is around half the growth expected for 2006.

"We expect the volume growth in 2007 to be above 15 percent in Asia Pacific, China, and Middle East and Africa, and below 10 percent in Europe, Latin America and North America," Nokia said in a statement. In 2006, mobile phone shipments are set to rise 21 percent according to Gartner.

Nokia cut its group operating profit margin target for the next one to two years to 15 percent from an earlier 17 percent citing rising exposure to infrastructure business after merging its networks unit with Siemens from the start of 2007.

"It is not really that bad news. The consensus (analyst forecast) was 13.5 percent for 2007 and 13.7 percent for 2008 anyway," said Cheuvreux analyst Peter Knox. "What I find slightly disappointing is the market growth forecast for next year of 'up to' 10 percent."

Nokia said it aims to increase its market share in the mobile phone business in 2007 from its current global share of close to 35 percent. It unveiled several new models, including a thin model to compete with thin phones from Motorola and Samsung.

The company also trimmed its operating profit margin for its two biggest units: Mobile Phones and Multimedia. It now expects a 17 percent operating profit margin for both devices units for the next one to two years, from an earlier 17 to 18 percent target.

"That is pretty interesting, a pretty bold move, they believe in themselves. The previous quarter was pretty soft because of product mix, with lower margins," said FIM Securities analyst Jussi Hyoty.

Nokia said it expects a slight growth in the mobile and fixed infrastructure and related services market in euro terms in 2007.