Nokia Oyj, whose cash position is equivalent to almost 10 percent of its market value, rose in Helsinki trading to its highest in five-and-a-half years as investors sought assets perceived as less risky.
Nokia shares rose 0.47 euros (US$0.64), or 1.9 percent, to 25.27 euros at 2:19pm in Helsinki, after reaching 25.48 euros, the highest since March 2002. The stock has gained 17 percent in the past month. The Dow Jones Stoxx 600 Index, a European benchmark, has fallen 0.3 percent on concern that higher borrowing costs following defaulted subprime mortgages will hurt earnings.
Nokia, the world's biggest maker of mobile phones, has increased its market share and profit with new models this year as rival Motorola Inc has stumbled. Espoo, Finland-based Nokia also announced services such as a music store, games and maps to rival Apple Inc. Nokia had 8.3 billion euros in cash at the end of June.
"They have a very strong balance sheet with lots of net cash, making them less sensitive," said Jan Dworsky, an analyst at Handelsbanken Capital Markets in Stockholm, Sweden.
New products and services announced last week and "exceptionally strong" second-quarter earnings have boosted the stock, he said.
Nokia, which ships about 13 handsets every second, spent 1.76 billion euros buying back its own shares in the first half. The company's annual general meeting in May authorized it to buy back as much as 10 percent of its stock in a year. Dworsky said he expects Nokia to use about half of the buyback mandate.
Credit Suisse analysts said this week Nokia has about 4 billion euros in excess cash that could drive redistribution and lift earnings per share in coming years.
Second-quarter profit at Nokia more than doubled. The company said it had 38 percent of the market in the quarter and forecast it would increase its share this quarter.
The company raised its forecast for the global handset market, saying it will jump 10 percent or more from 978 million units sold last year, when growth topped 20 percent.
"The company is winning market share and its portfolio is improving," said Janne Yliheikkilae, a fund manager at Tapiola Insurance Co in Espoo, Finland, which manages the equivalent of US$7.3 billion. "They don't need funding, so the credit market doesn't toss them around."
The company also benefited as Motorola failed to unveil a successor to its bestselling Razr model and retreated from competing on price in emerging markets such as China.
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