Nokia investors say drastic action needed at networks unit

17 Apr 2003

Investors in the world’s biggest mobile phone manufacturer Nokia [NYSE: NOK] have said that the vendor will need to fix its network unit to cut its losses. Nokia, which is due to report its results for the first quarter of 2003 later today, has already spent more than USD360 million to cover losses at its networks division, the second-largest in the world, as sales continue to fall. Analysts say that chief executive officer Jorma Ollila will need to sell the business or cut more jobs, on top of the 1,800 announced last week, if he is to plug the increasing deficit. Alternatively, with EUR8.8 billion in cash at the end of last year, Nokia could attempt a buy-out of a rival equipment maker. The company has already warned that pro-forma sales figures at its networks unit could be 15%-20% lower than those of the first quarter 2002, and is expected to announce an operating loss of EUR123 million against an 8% rise in the group’s total net income to EUR929 million. Nokia is the world leader in handset sales with 40% of the global market.