Telcos tumble as Nokia cuts target

TELECOMS stocks were forced into retreat in late morning trade, pushing wider markets into the red, after cellphone giant Nokia cut its sales growth forecast for this year.

The Finnish group topped City predictions with first-quarter profits of e0.19 a share, down 14% on the year.

But investors focused on its decision to slash its sales growth forecast to 4-9% for this year, from a previous 15% target. It dropped its forecast for global handset sales by 20m units to 400-420m.

Nokia makes one in three of the handsets sold globally, and is seen as a bellwether of the sector. Its shares tumbled 7%, with rivals such as Sweden's Ericsson and France's Alcatel also hit. In London, Vodafone, BT Group and mm02 all tumbled, helping push the FTSE 100 into the red by late morning. ARM, whose products are sold into the mobile phone market, dived 6% to top the Footsie fallers' board.

Nokia and rivals have been hit by telecoms operators holding off buying new network equipment, while consumers remain reluctant to buy new phones.

'The reduced forecast for the handset market is a surprise at this stage of the year...they are pulling back their own sales growth, and I would have thought they wouldn't need to do that until later in the year,' said Credit Lyonnais analyst Susan Anthony.

Nokia's first-quarter sales figures also disappointed and its networks division failed to hit its estimates. Total first-quarter net sales fell 12% to e7.01bn (£4.5bn), with net income also down 12%, at e1.31bn.