Nokia Siemens JV Cuts '07 Market Outlook

In a press release today, Nokia announced Nokia Siemens Networks began operations yesterday, as the world's third largest communications infrastructure company -- based on '06 pro-forma revenues of €17.1 billion. Its market outlook however, was disappointing, as growth is expected to be "very slight" for mobile and fixed infrastructure/services in euro terms in '07. The press release notes, "... over the last couple of months, there has been a narrowing of visibility and indications of a slowdown in spending in some regions." Nokia had previously forecast "slight growth" for '07 and says starting yesterday, financial results of the joint venture will be consolidated to Nokia. By 2010 the combined entity expects cost synergies of approximately €1.5b annually. Separately, MarketWatch reports Goldman Sachs upgraded the European communications technology sector today to "attractive" from "neutral." It cited consistent underperformance since April '04. Positive factors seen boosting earnings include Europe's comparatively large exposure to fast-growing emerging markets and the benefits of industry consolidation, among other things. Its top picks include Nokia and NDS.

Sources: Press release, MarketWatch [i, ii]
Commentary: Nokia Siemens JV Finalized; Starting Operations April 1 • Nokia-Siemens Telecom JV Delayed, But Not Dead • Motorola: Forget Palm, Think Nokia
Stocks/ETFs to watch: Nokia Corp. (NOK), Siemens AG (SI), NDS Group plc (NNDS). Competitors: Telefon AB LM Ericsson (ERIC), Alcatel-Lucent (ALU), Motorola Inc. (MOT). ETFs: Wireless HOLDRs (WMH), Morgan Stanley Technology ETF (MTK)
Conference Call Transcripts: Nokia Q4'06

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