Nokia (NOK) reported a disappointing first quarter last week and blamed worldwide economic problems for its sudden reduction in the next year's forecast. The Finnish cell phone giant expects the market to fall in euro terms and, although the company did see profits in the first quarter, the average selling price per phone plummeted.
This unexpected turn for Nokia has been greatly attributed to the weakened U.S. dollar, the slowing of the U.S. economy and the possible slowing of the European economy. The company experienced its greatest intraday loss since 2005 when shares dropped 9.6 percent last week.
Nokia, the largest maker of cell phones in the world, is largely dependent on its European market. The possibility of economic struggle is what most concerns the company and last week's revelation seems to indicate that the European economy is indeed winding down.
Although the company optimistically referred to their handsets as a "necessity item," Nokia also expects per unit prices to lower even more. Although last year was the best for the stock since 1999 (it rose 71 percent), this year has seen a 20 percent drop so far. This week Motorola (MOT) and Samsung (SSNNF) will report their earnings, which should shed some more light on the global handset market.
By-line:
Heather Johnson is a freelance finance and economics writer, as well as a regular contributor for CurrencyTrading.net, a site for currency trading and forex trading information. Heather welcomes comments and freelancing job inquiries at her email address heatherjohnson2323@gmail.com .
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Monday, April 21, 2008
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It figures that it is the fault of the weak US Dollar ;)
Dollar is strong now, we'll see if there results improve with the global slow down, I doubt it.