A strong third quarter earnings report from Nokia (NYSE: NOK) helped to lift the tech sector Thursday as wireless handset and chip makers surged. Shares of Nokia jumped 22 percent to 36.68.
Wireless handset maker Nokia, which bumped up its earnings report a week amid market volatility, on Thursday morning gave a rosy outlook for the next quarter and 2001. Sales rose 50 percent to 7.57 billion euros ($6.38 billion), while net income jumped 40 percent to 892 million euros ($752.22 million), or 19 cents a share. Pretax profit increased to 1.34 billion euros ($1.13 billion), well ahead of forecasts.
Investors cheered Nokia's results and Chase H&Q upgraded the stock to "strong buy" from "buy." Nokia talked down growth prospects in the second quarter and rattled wireless-related stocks.
But this quarter, the company was upbeat. Nokia said it has gained market share and added that the handset market is on track to sell more than 400 million mobile phones in 2000, leading to an estimated 1 billion users in 2002.
"For 2001, we expect the mobile phone market to be in the region of 550 million units," the company said.
That outlook was enough to lift Nokia's competitors. Motorola (NYSE: MOT) surged 9 percent to 22.68 and Ericsson (Nasdaq: ERICY) tacked on nearly 10 percent to 14.68.
Meanwhile, Nokia's outlook also propped up a few wireless chip makers, which had so-so outlooks, analysts said. Texas Instruments (NYSE: TXN) jumped 20 percent to 44.25, and RF Micro Devices (Nasdaq: RFMD) rebounded a 12 percent to 16 after a pounding Wednesday.
Texas Instruments, which makes digital signal processing chips, is a notable example. The company met analysts' estimates in its third quarter Wednesday, earning $591 million, or 33 cents a share, on sales of $3.16 billion. However, TI warned of a flat fourth quarter.
TI officials said fourth-quarter sales will only improve a few percentage points from the third quarter. The company's wireless sales will decline sequentially as certain major handset customers absorb semiconductor inventory in the fourth quarter, more than offsetting the continuing revenue growth in chipset and base-station products.
RF Micro Devices, which makes wireless chips, was hammered Wednesday following disappointing results. But shares rebounded Thursday on the heels of Nokia's results and some bottom fishing.
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