When All Goes Bust , Nokia stands strong

Via Forbes Magazine

Mobile phone market is certainly taking a hit with Nokia downgrading their forecast last year to less than 330 million phones to be shipped in last quarter of 2008 bringing their total down to below 1.24 billion handsets for the total 3billiion phone market which may increase to 4 billion as per some optimistic forecast for growing economies of India and China low handset market , the sector in which Nokia is dominant .

Sony Ericsson is reporting deeper-than-forecast losses for the fourth quarter. Pretax losses including restructuring costs were 261 million euros ($346.3 million) against an average forecast of a 77-million-euro loss ( Reuters )

Motorola is also feeling the heat and cutting down forecasts and work force by 4000 or 6% of it’s workforce . Most employees won’t get pay raises next year and announced a freeze to its U.S. pension plan and a temporary suspension to matching 401(k) contributions . This has to happen with only 19 million units sold .

But don’t be surprised if Nokia posts a stronger result on Jan 22nd . Although Nokia is not immune to economic downturn , it has taken steps to reduce the effect . Nokia has already gone lean earlier to cut down costs , Nokia is working towards increasing profits then to chase market share which will itself fall towards Nokia with a stronger offering .

“Nokia will be the relative winner in a market that in absolute terms seems to be declining,” said Lars Soderfjell, an analyst with Landsbanki, “simply because they have the largest volumes to distribute their fixed costs on.”

Nokia’s President and CEO Olli-Pekka Kallasvuo is also optimistic and says : “2009 will be challenging for our industry, however we have a strong, enviable base to build on and I believe we will continue to strengthen our position on many fronts. Building on our operational flexibility, Nokia is acting to reduce costs appropriately in the current slowing environment. At the same time, we remain fully committed to making the investments to build the future of our exciting industry and Nokia’s continued competitiveness.”

Shares of Nokia advanced 4.6%, to 10.86 euros ($14.44), during afternoon trading in Helsinki on Thursday , while SE and MOT lost ,

Nokia is much helped by it’s dominant position in India and China low cost markets , although Asian competitors like Samsung and LG are biting into Nokia’s share .

Analysts also foresee

2009 mobile device sales may drop by 5 percent or more compared to 2008.
The four billion mobile subscriptions mark is expected to be reached in the first quarter 2009.
Despite increased competition from Apple (NSDQ: AAPL) and RIM (NSDQ: RIMM), Nokia expects to increase in its market share in mobile devices in 2009 compared to 2008, including increased share in smartphones
Nokia expects services and software net sales of $2.6 billion (EUR 2 billion or more) in 2011.
Nokia targets its services and software business to have 300 million unique users by 2012.

Let’s see who survives this economic downturn , Nokia will what about others

Forecastingly

Farhan