Nokia shares rise after Motorola's strong Q2

Helsinki, July 20: Shares in the world's largest cellphone maker Nokia rose ahead of its second-quarter earnings report on Thursday, boosted by strong quarterly results from its closest rival Motorola Inc..

Motorola posted second-quarter earnings and revenue that beat Wall Street expectations due to strong demand for its phones and said it expects the demand trend to continue in the third quarter.

Analysts said they had slightly raised their expectations for Nokia in the light of its rivals' reports.

''If Nokia makes the published consensus, that won't be enough,'' said Evli analyst Ilkka Rauvola.

Robust demand for new cellphones in emerging markets in Asia is expected to lift second-quarter profits and sales at Nokia, when the firm reports at 1000 GMT.

Shares in Nokia were 1.5 percent higher at 15.80 euros by 0810 GMT, outperforming a 1 percent rise in the European technology index.

Motorola's quarterly mobile phone shipments grew 53 percent year-on-year to 51.9 million, the biggest increase of all four major handset makers which have reported results so far.

Motorola said it believed that it had increased its global market share by 4.3 percent to 22 percent since the second quarter of 2005.

''Motorola's report brought extra faith in the strength of the market in the second quarter,'' said Opstock analyst Hannu Rauhala.

In the Reuters poll, conducted before all main cellphone makers reported their numbers, analysts' expected the market grew about 20 percent to 226 million units from around 190 million a year earlier.

Korean players struggled in the quarter, with LG Electronics Inc. breaking even in its handset division, which sold 26 percent more phones. Samsung Electronics Co. Ltd handset sales rose 8 percent year on year.

Japanese-Swedish Sony Ericsson grew handset unit sales by 33 percent and overtook the global No. 4 spot from LG.

NO PRICE WAR The average selling price (ASP) of a Nokia phone is expected to fall to 101 euros in the April to June quarter from 103 euros in the first three months, due to a weaker U.S. dollar and stronger sales growth in emerging markets, where consumers usually go for cheaper models.

''Second quarter margins have been in line with expectations or slightly better for all four. This shows that there is no tough price war going on,'' analyst Erkki Vesola, of Mandatum Stockbrokers, said.

The total operating profit margin at Nokia's main phone units is seen falling to 16.9 percent from 18.5 percent in the first quarter, due to higher spending on marketing its new models. This is still up from 14.7 percent in the second quarter a year earlier.

Nokia's underlying earnings per share is set to jump to 0.24 euros from underlying 0.17 euros a year ago, according to a Reuters poll conducted before quarterly reports of rivals. The reported EPS numbers are expected to include 5 to 6 cents per share in one-off gains from the settlement of a claim against Turkish telecom operator Telsim.

Nokia's net sales for April to June are on average projected to rise 21 percent from last year to 9.76 billion euros.

The Finnish firm, which sells more than a third of all phones across the world, is seen benefiting from its early entry in emerging markets, where its cheap models have given it more than a 50 percent share in many countries.

Analysts expect the company to have sold 78.5 million handsets of all models in the second quarter -- 29 percent more than a year ago and giving it a market share of 34.7 percent.

Nokia said in April it expected its share of the market in the second quarter to be roughly on par with the 35 percent it commanded in the first three months.

Reuters