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Nokia Q1 Phone Profit Flat, Sales Off 7%

HELSINKI, FINLAND – Despite weak demand, mobile phone maker Nokia recorded a profit that was generally better than expected by the financial community.

Operating profit for the first quarter dipped 10 percent, hitting $1.1 billion, down from $1.2 billion in the year-ago period.

Operating profit for Nokia’s Mobile Phone segment in the first quarter was virtually unchanged, year over year, at $1.1 billion.

Sales in the Mobile Phone segment in the first quarter decreased 7 percent, to $4.8 billion, down from $5.2 billion in the same three months in 2001. This reflects lower sales in Europe and the Americas, partially offset by growth in the Asia-Pacific region, the company said.

Overall company sales dropped 12 percent, reaching $6.2 billion, compared with $7.1 billion in the first quarter of last year.

Nokia net profit in the first quarter slid to $767.9 million, down from $867.5 million in the previous year.

Nokia, which warned about weaker sales for the full year, expects growth of 2 percent to 7 percent in the second quarter, compared with the same three months in 2001.

It anticipates its mobile phone business will climb 5 percent to 10 percent in the second quarter of 2002, year over year.

Mobile phone market volumes in the first quarter were broadly in line with company expectations. However, Nokia now said that general weakness in all key regions will affect mobile phone demand for the remainder of the year.

The company, therefore, has lowered total market volume estimates for 2002 to a range of 400 million to 420 million units. This would reflect modest growth over last year’s estimated market volume of 380 million units.

Overall sales growth is forecast to accelerate to 15 percent or more for the second half, culminating in full-year annual sales growth ranging from 4 percent to 9 percent. This would be 5 percent to 10 percent for mobile phones.

Pro forma operating margins for the mobile phone business is expected to be at about the 20 percent level for the remainder of 2002, Nokia said.