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Smartphone strategy and Japan in focus for Nokia results
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By Tarmo Virki, European Technology Correspondent
HELSINKI (Reuters) - Nokia investors concerned about dwindling market share are anxious for better news on the tie-up with Microsoft and details of cost cuts when the handset maker posts quarterly...
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By Tarmo Virki, European Technology Correspondent
HELSINKI |
Thu Apr 21, 2011 12:47am EDT
HELSINKI (Reuters) - Nokia investors concerned about dwindling market share are anxious for better news on the tie-up with Microsoft and details of cost cuts when the handset maker posts quarterly figures on Thursday.
Nokia is expected to report a 29 percent fall in earnings per share as nimbler Asian rivals eat into its dominant position in cheaper phones and it continues to lose out in more expensive smartphones to Apple and others.
Overnight Apple smashed Wall Street expectations and reported record quarterly iPhone sales, narrowing the gap to Nokia's smartphone volumes.
To turn around its smartphone fortunes, Nokia's new Chief Executive Stephen Elop in February unveiled a deal to start using Microsoft software instead of its own Symbian platform.
Investors are awaiting details on the cost savings stemming from the switch.
"Broader knowledge of what the agreement contains would reduce the uncertainty relating to the share and would thus support the share price," said Pohjola analyst Hannu Rauhala.
Nokia shares have dropped some 30 percent following the Microsoft deal as investors doubt the wisdom of the new hardware-centric strategy.
Nokia said the deal would enable it to cut a significant number of jobs. The final deal between the two is expected to be signed this month.
Finnish unions have said the firm will cut thousands of jobs in its home country alone, with analysts pointing to possible annual savings of 1 billion euros ($1.4 billion).
The underlying operating profit margin at Nokia's phone unit, a key metric for the group, is expected to fall to 8.6 percent from 11.3 percent in the previous quarter, hurt by market share losses and price cuts of its key models.
Qualcomm, the top wireless chip maker, also reported results that beat expectations and raised its outlook overnight, quelling fears of phone market slowdown.
"We expect Qualcomm ... to alter the entire handset sector sentiment after a spike in negativity in recent weeks," said analyst Tero Kuittinen from MKM Partners.
Analysts say that, despite its bigger bargaining power, Nokia is likely to be among the phone makers worst hit by the disruption to supplies from last month's devastating Japanese earthquake.
It makes 450 million phones a year, which means quick and big changes in component supply are difficult.
Nokia warned in March it would have shortages of some of its phones, but said the impact on earnings would be limited.
Nokia's smaller rival Sony Ericssonsaid this week there were shortages of displays, batteries, camera modules and some printed circuit boards due to the quake.
(Editing by David Cowell and Lincoln Feast)
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