Nokia: Optimistic Despite Slump

Nokia may be the world’s largest cell phone manufacturer, but they’ve recently reported the smallest quarterly profit since 1996 – over ten years ago and when the cell phone industry was still gaining steam. Despite the slump, the company is optimistic about their future and believes that the worst may be over.

CEO Olli-Pekka Kallasvuo says that retailers have kept smaller inventories on hand, which means that there will be a stronger demand in the coming months. The Finnish company saw their sales fall by 27% from January to March, but in many places, cell phone sales in general were down by far greater numbers. The company says that they expect and are prepared for a decline of 10% in 2009 as compared to 2008.

Neil Mawston, an analyst with Strategy Analytics, says that Nokia’s assertion that the market will begin to gradually recover is probably right. He agrees that the first quarter of 2009 would be the low paint for the industry. Still, others wonder is the company can survive, since Nokia has seen a dramatic decrease in free cash flow. They’ve suspended a number of programs to preserve cash, but some investors believe that they aren’t doing enough to make it through 2009 unharmed.

Image via sxc.hu.