Nokia lowers its operating margin target

Nordic Business Report, Nov 28, 2006

NORDIC BUSINESS REPORT-28 November 2006-Nokia lowers its operating margin target(C)1994-2006 M2 COMMUNICATIONS LTD http://www.m2.com

Finnish telecomms solutions provider Nokia (NYSE: NOK) presented on Tuesday (28 November), at its annual Capital Market Days event, its forecasts for the industry and its financial targets for the next one to two years.

Nokia expects industry mobile device volumes in 2007 to grow by up to 10% from the approximately 970m units estimated for 2006. The company expects the volume growth in 2007 to be above 15% in Asia Pacific, China, and the Middle East & Africa, and below 10% in Europe, Latin America and North America.

Nokia also expects the device industry to experience value growth in 2007, but expects some decline in industry ASPs, which primarily reflects the increasing impact of the emerging markets and competitive factors in general.

The company forecasts that the 3bn mobile subscriptions mark will be reached in 2007, instead of in 2008 as previously forecast. Nokia also sees slight growth in the mobile and fixed infrastructure and related services market in euro terms in 2007.

Nokia has set its operating margin target to 15% during the next one to two years. The target is revised from the one to two year 17% operating margin target Nokia set in December 2005.

Device (Mobile Phones and Multimedia combined) operating margin target is set to 17% during the next one to two years. This target is revised from the earlier one to two year 17-18% device operating margin target.

By refreshing its design approach, introducing a consumer-category driven strategy to its product portfolio, and focusing its marketing spend, Nokia said it aims to reinforce its device market leadership and continue to further refine its mid-range portfolio.

Nokia also expects to meet its previously stated target to reduce overall R&D expenditure to 9-10% of net sales by the end of 2006.

In addition Nokia said that progress towards forming Nokia Siemens Networks is proceeding, with operations currently expected to commence in January 2007.

Nokia, headquartered in Espoo in Finland, is a global mobile phone and network equipment manufacturer. It has nearly 59,000 employees worldwide, and reported net sales of EUR34.19bn in 2005. Nokia is listed on the Helsinki, Stockholm, Frankfurt and New York stock exchanges.

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