The world's top cell phone maker Nokia calmed jittery investors on Thursday by reaffirming its forecast for the handset market and saying visibility was improving, sending its shares higher.
January-March sales and profit fell sharply as the economic downturn sapped demand for new phones, with reported earnings per share sinking to 0.03 euros from 0.32 euros and missing he average forecast of 0.06 euros in a Reuters poll.
The cell phone market is facing its toughest year ever in 2009, with Nokia repeating its forecast for market volumes to fall around 10 percent.
Nokia shares gained a much as 10 percent on the result, cheered by the firm holding steady on its outlook after a grim quarter marked by mostly negative news. At 1036 GMT the share was up 8.8 percent at 11.02 euros. To cope with slowing demand Nokia has focused on cost cuts in early 2009, slashing jobs across its operations while also halting the use of subcontractors in phone manufacturing.
Nokia Chief Executive Olli-Pekka Kallasvuo said inventories of unsold cell phones had decreased substantially in the quarter.
(This) has also resulted in the demand picture becoming more predictable as we enter the second quarter, he said.
Nokia's Chief Financial Officer Rick Simonson told Bloomberg TV it was too early to call the bottom of the market.
Nokia repeated that the underlying operating margin at its key phones unit would top 10 percent in the first half of the year, and be in the range of 13-19 percent for the second half.
Nokia cut its network infrastructure market outlook, saying it expected a contraction of some 10 percent in euro terms in 2009 versus a previous call for a fall of 5 percent or more. The comments sent shares in Swedish rival Ericsson lower.
(Reporting by Tarmo Virki, Additional reporting by Brett Young; Editing by David Cowell)