updated 9/9/2004 5:41:03 PM ET 2004-09-09T21:41:03

Nokia Corp. raised its earnings and revenue forecasts for the current quarter due to growing mobile phone sales, the first glimmer of good news in months for the besieged world leader in mobile phones.

The projections boosted Nokia's stock price but analysts cautioned it was premature to say if they showed Nokia was in position to shore up its market share and fend off rivals viewed as having more stylish and desirable phones.

Nokia said Thursday its expects earnings per share would be between 13-16 cents for the three months ending Sept. 30 compared with a previous estimate of 10-12 cents.

Based on sales during July and August, Nokia also said its revenue for the period would likely be $8.3 billion to $8.4 billion. In July, the company predicted its sales wouldn't top $8.2 billion for the third quarter.

On the New York Stock Exchange, Nokia's U.S. shares rose $1.06, or 8.3 percent, to close Thursday at $13.77.

"This was good news for Nokia, but the competition is tough out there, much tougher than before," said Jussi Hyoty, chief analyst at FIM Securities. "And if Nokia wants to achieve the same overwhelmingly strong position it had earlier, which would be very difficult, then it really needs groundbreaking new models and clear alternatives."

Just last year, Nokia said it wanted to reach a 40 percent share of the global market, but its hopes were dashed as rivals Motorola Inc., Samsung, LG and Sony Ericsson came out with consumer-appealing models and undercut Nokia's share.

But Nokia's market share has since dropped below 30 percent, according to the market research concern Gartner Inc.

Nokia chief executive Jorma Ollila has made it a priority to regain favor with new models with trendier designs, better camera phones and easier connectivity to e-mail and the Internet.

Boom in handset market
The handset market is undergoing a boom, with sales up some 35 percent in the second quarter to 156.4 million, according to Gartner. Earlier this month, it said sales could reach 650 million by the end of the year.

Nokia said its own figures showed handset sales worldwide for the industry were up to an estimated 148 million. It expects that market to continue grow in Europe, the Middle East and Africa, but hold steady in Asia and the Americas.

Nokia is the bellwether of the mobile phone trade and still sells more than twice as many phones as its leading rival, U.S.-based Motorola. But that wasn't enough stem market loss.

Analysts have blamed Nokia for a lack of catchy designs and innovative new models, like the hugely popular folding "clamshell" models, and partnerships with operators.

Gartner said in June that the Finnish company's global market share in mobile phones dropped to 28.9 percent in the first quarter of 2004 from 34.6 percent a year earlier.

Last week, however, Gartner said Nokia sales had again picked up and that it reached 29.4 percent of the global market in the second quarter of the year.

It has introduced models like the 6230, which boasts a camera, video recorder and FM radio.

Another high-end model, a clamshell 6260 with a swiveling flip, has a video recorder, Web browser, e-mail and an optional wireless keyboard.

Consumers appear to have responded to the new models and lower prices.

Earlier this year, Nokia warned of a shortage of the 6230 because production couldn't meet demand. But on Wednesday, Nokia's chief strategy officer Matti Alahuhta said the 6320 was selling at twice the expected rate with 1.5 million handsets sold in the second quarter.

In Shanghai, China, on Thursday, Nokia unveiled three more handsets from its fashion collection, all inspired by 1920s styling and design, featuring the Nokia 7260, 7280 and the clamshell 7270, that blend old world art deco with an edgy, modern day twist.

The company said the Nokia 7280 features a camera phone and an active slide to answer or end calls with a flick of the wrist, and with Nokia Collector, users can transfer photos, ring tones, wallpapers, music and videos to and from Apple Computer Inc.'s line of Macintosh computers.

"The global mobile device market has continued its strong volume growth in the third quarter 2004, and Nokia expects healthy sequential volume growth in its mobile device sales," the company said

"The company has been able to deliver mobile devices in higher volumes than previously estimated despite industrywide tightness in some components," Nokia said, but added that it had also dropped handset prices to increase sales.

Nokia warned that sales in its ailing networks sector would continue to slip in the period.

The company plans to release its third-quarter results Oct. 14.

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