Investors scanning the horizon for rays of economic hope may find some cheer in first-quarter results from Nokia, which the world’s largest mobile-phone maker is set to release on Apr. 16. While sales and profits most likely declined in the period, some analysts expect the Finnish company to say it has worked down the bulging handset inventory that built up in the fourth quarter of 2008, setting the stage for a return to growth.
If so, Nokia, which is renowned for its supply-chain efficiency, would build support for the view that one reason the current downturn hit so suddenly was that companies reacted more rapidly than in the past to a drop in demand. They dialed back production drastically when the global economy slowed — but could also ramp up fairly quickly as the market stabilizes. “If the supply side is leaner and fitter and sharper during the downturn, then it has potential to race back faster in the upturn,” says Neil Mawston, a senior analyst of the wireless industry for market researcher Strategy Analytics.
Nokia shareholders are due for some good news. In the fourth quarter of 2008, sales dropped a stomach-churning 19 percent from a year earlier, to $16.5 billion, while operating profit plunged 80 percent, to $639 million. One reason was a surfeit of phones, combined with Nokia’s refusal to engage in price wars in developing countries. In China, the company’s largest market, Nokia sold 36 percent fewer devices in the fourth quarter compared with the year-earlier quarter.
Stock on the Rise
Analysts expect Nokia to report further steep declines during the first quarter of 2009. Brokerage Nomura International forecasts a 26 percent drop in sales, to $12.5 billion, while net profits could plunge 90 percent year-over-year, to $113 million. But Nokia shares have been rising recently — up 60 percent…