Nokia leaves investors in dark over outlook

Thu Feb 11, 2016 4:42am EST
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By Jussi Rosendahl

HELSINKI (Reuters) - Finnish telecom gear maker Nokia warned that demand for new mobile networks would slow this year in China and said it would not give a financial outlook until April following its acquisition of Alcatel-Lucent.

The 15.6 billion euro deal helps Nokia to compete with Sweden's Ericsson and China's Huawei previously the world's top two suppliers of network gear, in a market where limited growth and tough competition are pressuring prices.

Nokia CEO Rajeev Suri said the company expected market growth this year in North America, India, the Middle East and Africa, while fast growing China will cool down.

"We do expect some market headwinds in 2016 as 4G/LTE rollouts in China and some other markets start to slow," Suri said.

"The first quarter, in particular, looks quite challenging as customers assess their CAPEX (spending) plans in light of increasing macroeconomic uncertainty."

Nokia shares were down 3.5 percent by 0920 GMT and have fallen about 30 percent since the announcement of Alcatel deal last April.

"They didn't give any financial guidance for this year, and all they said about the outlook was that the (networks) market demand looks rather weak. This is a bit like walking in fog," said Mikael Rautanen, analyst at Inderes Equity Research, who recommends investors reduce their holdings in the stock.

Nokia and Alcatel's combined sales for 2015 year give the merged company a claim to be the world's biggest mobile network supplier, but cost-cutting and eliminating overlap will likely relegate it to second place behind Ericsson.   Continued...

The Nokia headquarters is seen in Espoo, Finland, July 28, 2015. Nokia Corporation published the interim report for Q2 2015 and January-June 2015 on July 30, 2015. REUTERS/Mikko Stig/Lethikuva/Files