Nokia Oyj, the biggest mobile phone maker, will have to show this week it can keep its margins at industry record levels and reach its sales targets to underpin a stock that's doubled since September, investors said.
Nokia will give an update on its forecasts Dec. 11. Last month, Chief Executive Jorma Ollila told investors in New York he expects sales next year to rise 15 percent and reach a growth rate of as much as 35 percent in the fourth quarter of next year.
The company has outpaced rivals by adding new features to its phones faster than the likes of Ericsson AB. Nokia, which has one third of the global handset market, also kept its operating margin in the cellular unit near 20 percent by reducing expenses.
"You can't keep meeting your numbers through cost cuts, you have to boost top-line growth," said Arnold Gast, who helps oversee about US$5 billion in assets at Theodoor Gilissen Bankiers NV in Amsterdam. "There is not much room left" for Nokia.
When Nokia reported a smaller-than-expected earnings drop of 18 percent for the third quarter in October, the company predicted fourth-quarter earnings of between US$0.18 and US$0.20 a share.
It also said mobile phone sales will rise.
Last month, Nokia said operating margins in mobile phones will remain in the "high teens" throughout next year. In the third quarter, that margin was 19 percent in the mobile unit. The Finnish company is the only handset maker that's profitable. The shares Friday closed at 28.55 euros, up from 13.56 euros on Sept. 10. Ericsson's shares have risen 52 percent in the period, while Siemens AG, the No. 5 mobile phone company, has gained 51 percent. Motorola Inc. has gained 12 percent.
Nokia has cut its outlook for industry phone sales five times this year as demand waned amid slowing economies. Ollila a year ago predicted global handset sales of 550 million for this year. Last month, he lowered that number to 380 million units. Next year, Nokia expects as many as 440 million phones to be sold.
Nokia last month said it'll reach its long-term sales growth target of 35 percent in the final quarter of next year. It previously predicted it will reach that rate "at some point" next year.
"The first and the second quarter won't be good ones," said Rami Hakola, who manages about 3.3 billion euros in stocks at Varma-Sampo Mutual Pension Insurance and holds Nokia shares. Earnings "won't recover as quickly as the market hopes for."
The company has said it expects sales to accelerate as customers buy into new services and technologies.
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