Nokia, the world's top mobile-phone manufacturer, bucked the trend in a gloomy telecom market by announcing a 10 percent increase in first-half profits.
But despite relatively strong profits, Nokia disappointed markets by trimming its full-year earnings, networks operating margins and global handsets sales projections, with chief executive Jorma Ollila warning the sector would not show dramatic improvement until next year.
"Economic conditions in the latter part of the year will continue to be hard," he said.
Nokia's profits were in the upper range of analysts' estimates, and the price of its shares initially rose on the news in Helsinki before falling back 4.11 percent to close at 13.77 euros.
Other telecom stocks across Europe reacted mildly to the Nokia report, with analysts saying the figures were largely expected following a mid-quarter report in June.
In Stockholm, Swedish rival Ericsson, which is to publish its report for the first half on Friday, fell and then rose before going flat at 14.90 kronor, while in Paris, Alcatel was up 3.48 percent at 7.14 euros.
Nokia announced net profits had risen to 1.72 billion euros, but slipped by 3 percent to 1.82 billion euros excluding goodwill amortization and non-recurring items.
Sales dropped to 13.9 billion euros in the second half, and the group trimmed its full-year earnings per share guidance to 0.79-0.84 euros from the 0.83 euros previously announced.
Recent months have seen growing concerns about the future of the telecom industry, which is crippled by debts amid doubt about whether new technology will be as profitable as forecast.
In addition, there have been repeated delays in the launch of third-generation mobile telephony technology, featuring sound and image messaging and mobile e-mail and which is considered key to the sector's revival.
As a result, Nokia's Networks division posted a 52 percent decline in operating profit in the first half.
The group said its overall sales growth would be driven by volume deliveries of a number of advanced high value-added models during the second half and revenue from 3G network sales, "assuming the necessary technology milestones are satisfied."
The delays have also affected mobile phone sales, as customers postpone the purchase of new handsets until the new services are available.
Nokia cut its full-year global handset sales forecast to 400 million from the 400-420 million seen previously. The new outlook is in line with that predicted Wednesday by US mobile phone maker Motorola.
"I was expecting neutral or slightly negative results and this is slightly disappointing," Mika Metsaelae, a telecoms analyst at Kaupthing Sofi said.
"Important is Nokia's third-quarter guidance which is considerably lower. If they want to reach their full year earnings per share, there is a big pressure for the fourth quarter," he said.
Nokia said meanwhile it expected its full-year market share to show an increase on last year's 37 percent, leaving its rivals in the dust.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
PRESSURE EXPECTED: The appreciation of the NT dollar reflected expectations that Washington would press Taiwan to boost its currency against the US dollar, dealers said Taiwan’s export-oriented semiconductor and auto part manufacturers are expecting their margins to be affected by large foreign exchange losses as the New Taiwan dollar continued to appreciate sharply against the US dollar yesterday. Among major semiconductor manufacturers, ASE Technology Holding Co (日月光), the world’s largest integrated circuit (IC) packaging and testing services provider, said that whenever the NT dollar rises NT$1 against the greenback, its gross margin is cut by about 1.5 percent. The NT dollar traded as strong as NT$29.59 per US dollar before trimming gains to close NT$0.919, or 2.96 percent, higher at NT$30.145 yesterday in Taipei trading
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