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Handset sales boost Nokia's profits

Strong demand for new handset models boosted Nokia's profits in the September quarter, and the company reiterated its forecast for total sales of 400 million units in 2002.
Nokia s September quarter 2002 sales rose by 2% compared with the September quarter 2001, reaching EUR 7.2 billion. Sales for Nokia Mobile Phones grew 7% year-on-year to EUR 5.6 billion, reflecting strong growth in Europe and continued growth in Asia Pacific, partially offset by lower sales in the Americas. Sales for Nokia Mobile Phones were EUR 5.4 billion in the June 2002 quarter.

Sales for the Nokia Group in the fourth quarter 2002 are anticipated to grow by 2-5% year-on-year and to be in the range of EUR 8.9 billion to EUR 9.2 billion. Growth is being primarily driven by increasing volume deliveries of the company s very strong product range in mobile phones.

"Color and multimedia are adding excitement to mobile communications," said Jorma Ollila, Chairman and CEO of Nokia. "The handset market is entering a new growth period spurred by the arrival of an increasing number of mass volume products with color and multimedia messaging capability, all enriching the customer experience. Current visibility suggests overall market volume for 2002 will reach our earlier expectations of 400 million units sold."

Earlier this week, Motorola also told analysts in a conference call that it now expects 390 million mobile phones to be sold in 2002, down from its previous estimate of 400 million.

According to Nokia, all regions are estimated to show growth of at least 5%, led by Asia Pacific and Europe and followed by the Americas. GSM continues to be the largest cellular standard globally, with nearly 75% of all new mobile subscribers in 2002 so far estimated to be GSM users.

Nokia s third-quarter mobile phone sales volume increased year-on-year by about 17% to 37 million units, clearly outpacing growth in overall market volume, which is estimated to have increased by about 13% to around 103 million units.

Industry-wide channel inventories decreased during the quarter. With the ramp up of new high-volume consumer products and the rise of holiday product campaigns, the company expects fourth-quarter market share to be substantially higher than in the third quarter.

During the January to September period, Nokia Mobile Phones announced 24 new products. The company plans both additional new product announcements and rollouts for the current quarter, which will bring the total number of new product shipments for the full year to over 30.

Infrastructure and new services

According to Ollila, the mobile network infrastructure market remains challenging with continued low investments. "However, we have seen significant progress in the third-generation WCDMA rollout," he said. "Pre-commercial network launches are underway and manufacturers and operators are completing interoperability testing."

"I have no doubt that wireless wideband technology will become vital for capacity, speed and quality of service, as the industry moves forward at full speed. In September, we demonstrated our first dual-mode WCDMA/GSM phone on a live network. Type approval tests for the Nokia 6650 have been passed and we are ready to begin shipments to operators. We expect the 3G business system to be sufficiently mature to support broad handset shipments within the first half 2003."

During the third quarter, investments in GSM infrastructure continued at a low level. However, operators are actively preparing for new advanced services. Notably, more than 50 GSM operators in Europe and Asia have already begun offering multimedia messaging services (MMS).

At the end of the quarter, Nokia had delivered EDGE-capable GSM network equipment to 23 operators across all GSM frequencies in all continents, supporting the company belief that EDGE technology will be widely deployed.

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