Nokia Q2 EPS seen up 16 pct, eyes on outlook

By Tarmo Virki

HELSINKI (Reuters) - Nokia Oyj (NOK1V.HE: Quote, Profile, Research) is expected to report a 16 percent earnings rise due to strong demand in emerging markets, yet its comments on the impact of slowing growth is likely to set the tone for its shares.

The world's largest phone maker is benefiting from its dominant position in emerging markets and in cheap models, a Reuters poll of 31 analysts showed on Tuesday.

The group is expected to report second-quarter earnings per share minus one-off items rising to 0.37 euros from 0.32 euros a year earlier, according to the average forecast in the poll.

"The economic uncertainties have definitely affected sales of pricier phones. Quite a moderate quarter has already been priced into the share," said Pohjola Bank analyst Hannu Rauhala.

"The most interesting part is the outlook. Visibility is weak."

Shares in Nokia, down 1.9 percent at 15.56 euros by 1150 GMT, have dropped more than 40 percent so far this year over investor fears that the global economic slowdown has started to crimp the handset industry.

The world's fifth largest phone maker Sony Ericsson (6758.T: Quote, Profile, Research) (ERICb.ST: Quote, Profile, Research) warned on June 27 it would make no profit in the April-June quarter due to weaker demand for its more expensive phones, and said the market was challenging.

Yet analysts say Sony Ericsson's problems could be more related to its internal issues than market demand, as smartphone maker High Tech Computer (HTC) (2498.TW: Quote, Profile, Research) this week reported 21 percent year-on-year sales growth for June.