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Nokia hit its targets for profits and sales growth, but its shares slumped on the Stockholm exchange as the mobile sector continues to be stagnant.

The mobile manufacturer said on Thursday that it expected handset sales to grow by between three and 10 per cent in the second half of the year. However, this new outlook compares to a previous forecast of 15 per cent growth during the period.

One of its main rivals, Motorola, recently lowered its expectations for 2002 sales by 20 million to 400 million, which is also Nokia's projection for year-end total sales.

In addition, investors are unlikely to be cheered by the statement from Nokia's Chairman and Chief Executive, Jorma Ollila, that economic conditions in the latter part of the year will continue to be hard. The company did say though that it expected its share of the mobile phone market to increase by one per cent during 2002 to 38 per cent.

On the Stockholm stock exchange Nokia was down nearly four percent by mid-day on Thursday. The stock was trading at SEK129.00, which was down SEK5.00.

In its latest quarterly results, Nokia said that net sales were down 6 per cent from the same quarter a year ago. Sales in Q2 2002 were EUR6.9 billion, compared to EUR7.3 billion in Q2 2001. Pro-forma operating profit in its latest quarter was EUR1.26 billion, which was up from EUR1.14 billion a year ago and was an 11 per cent increase.

Pro-forma earnings per share were EUR0.19, which was within the company's target of EUR0.18 to EUR0.20, and EUR0.01 ahead of the average estimate from analysts.

Sales of Nokia's mobile phones were up one percent on the same quarter a year ago to EUR5.4 billion. Operating profit in its main division rose 22 per cent to EUR1.2 billion.

Margins did fall though to 17.9 per cent, but Nokia said that it expected to hold margins of 20 per cent for the remainder of the year.

The firm also said that sales growth during the second half of the year in its handset unit should be driven by the increased availability of phones that allow people to send multi-media content such as photos and MMS. It added that it would start shipping 3G-enabled phones early in 2003 as long as the roll-out of appropriate networks had begun.

Its mobile networks division did not fare so well with sales down 22 per cent to EUR1.5 billon compared to the same quarter a year ago. Nokia said this fall was due to "continued-lower-than-expected" 2G investments in China and Europe. © ENN

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