Investors weren't happy. Nokia lost about $2.44 a share in heavy trading after the morning bell. Shares recovered slightly, closing down $1.71 at $35.28.
The company reported fourth-quarter earnings of 23 cents per share, up 39 percent from a year ago and 2 cents better than what a consensus of First Call analysts were expecting.
Net sales for the quarter were up 46 percent, the company reported.
The final quarter of the year capped what Nokia CEO Jorma Ollila described as a year that was "nothing short of extraordinary." Both net sales and earnings per share were up more than 50 percent for the year, the company reported.
But the stock slid on news that the company is expecting sales growth of about 25 to 30 percent in the first quarter of the year, lower than the 25 percent to 35 percent range that Ollila predicted at the end of the third quarter.
"The economic outlook in some areas will cause short-term uncertainties," Ollila told investors.
Ollila said the company is also lowering the range of total expected cell phone sales for the year. Nokia now expects anywhere between 500 million and 550 million, Ollila told investors. At the end of the third quarter, it expected that 550 million phones would be sold in 2001.
Nokia is still holding to its forecast of sales growth between 25 percent and 35 percent for 2002 and 2003.
This is the second time Nokia has disappointed investors in less than a month. On Jan. 9, Nokia announced that it sold 128 million cell phones in 2000, up 78 million, or 64 percent, from 1999. But the industry was expecting a high number for 2000 sales, on the order of 135 million to 140 million.
Some analysts were still upbeat, despite the gloomy forecast that showed even the leading telephone maker in the world isn't immune to the industry slowdown that has hit No. 2 Motorola and No. 3 Ericsson.
"Pressure in its mobile phone division will be temporary," Merrill Lynch analyst Adnaan Ahmad said in a research note.
He added that the company's network infrastructure division should remain strong, growing about 18 percent for the year.
Analyst Per Linberg at investment firm Dresdner Kleinwort Wasserstein wasn?t as rosy.
"This is a veiled profit warning," he said.
Cell phone market retreating?
Industry analysts have been predicting for months that the cell phone market is in retreat. The industry, which has seen two huge years of growth, is nearing its saturation point in key markets like Europe and Japan.
Cell phone users also seem to be waiting for the next generation of Web-enabled phones to hit the market before opening their wallets again. That is unlikely to happen until the first so-called 3G, or third-generation, phones are on the market in the second half of the year, analysts say.
Nokia's gloomy outlook for 2001 also completes a hat trick of bad news from the top three cell phone makers in the world.
Last week, Ericsson said it was turning over production of its cell phones to Flextronics, a Singapore-based contract manufacturer. The Ericsson brand will survive; the company just won't be making any of its phones.
It had earlier cut its 2001 sales growth forecast to between 15 percent and 20 percent. Ericsson had expected sales to grow more than 20 percent.
Motorola has also made cost-cutting moves, including halting cell phone manufacturing at its plant in Harvard, Ill., and firing about 2,500 workers.
Qualcomm was the first major player to get out of handset making, telling the world in December that it was selling its manufacturing arm to gadget maker Kyocera.