Nokia Falls Most in Two Months as Supplier Sees Sales Drop: Helsinki Mover

Nokia Oyj (NOK1V), the world’s largest maker of mobile phones, fell the most in two months in Helsinki trading after a supplier warned of lower sales and Danske Bank A/S downgraded the stock.

Nokia declined as much as 8.7 percent, the most since Nov. 22. The shares fell 6.9 percent, or 0.3 euros, to 4.1 euros at close in the Finnish capital. Nokia was cut to “sell” based on a decline in shipments of older Symbian phones, Ilkka Rauvola, an analyst at Danske Bank, said in a report today.

STMicroelectronics NV (STM), Europe’s largest semiconductor maker, said yesterday first-quarter revenue will fall as much as 10 percent from the prior three months because of lower sales at the joint venture ST-Ericsson SA. ST-Ericsson has been a supplier to Nokia of components including processors for Symbian handsets, transceivers and power management chips.

“Both sales and operating results will continue to be challenging in coming quarters, due to the reduction in the short term of new product sales with one of our largest customers,” ST-Ericsson said in a separate fourth-quarter report yesterday, without naming the customer.

Nokia, which reports earnings on Jan. 26, probably had a fourth-quarter loss of 91.6 million euros ($119 million), according to the average of 20 estimates compiled by Bloomberg. Sales may have fallen 21 percent to 10 billion euros, according to the average of 35 estimates.

Software Transition

The Espoo, Finland-based company is partway through shifting its smartphone production to Microsoft Corp.’s Windows Phone software, replacing its own Symbian operating system. The first Windows Phones, the Lumia 800 and Lumia 710, started selling in Europe and Asia last quarter.

“First-half device sales are likely to be soft as Lumia demand ramps up only gradually and Symbian declines steepen,” Tim Boddy and other Goldman Sachs analysts wrote today in a report. “Nokia remains in a challenging transition period.”

The Windows Phones are “unlikely to compensate” for the “sudden decline” in Symbian handset shipments, Danske Bank’s Rauvola said.

Nokia smartphone shipments may have declined 35 percent to 18.5 million units in the quarter, according to the mean estimate of 23 analysts surveyed by Bloomberg. Other handsets probably gained 2.1 percent to 97.4 million units, 21 analysts said. Based on analyst estimates of 446 million handsets shipped by the industry, that would give Nokia a 26 percent share of the market.

Lumia Sales

Shipments of the Lumia line alone may be 1.3 million handsets for the fourth quarter and 3.2 million units this quarter, a separate survey of analysts showed.

The first Lumias used the Snapdragon processor from Qualcomm Inc., which includes an integrated modem replacing so- called baseband chips used in earlier phones. ST-Ericsson has signed a contract to supply processors with integrated modems for later Lumia models. Texas Instruments Inc. (TXN), a longtime Nokia chip supplier, today reiterated plans to wind down its baseband chip operations as its business with Nokia declines.

Ericsson AB, the other parent of ST-Ericsson, declined 0.6 percent to 68.5 kronor in Stockholm. Ericsson reports earnings tomorrow.

To contact the reporter on this story: Diana ben-Aaron in Helsinki at dbenaaron1@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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