Finland: Major Finnish IT Companies Failed To Meet The Market Expectations

An increased number of major Finnish IT companies have posted quarterly results, which have not met the market expectations. The first in the line to report more or less disappointing results was the telecommunication operator Sonera who posted a second quarter profit before extraordinary items of EUR 85 million, excluding the one-off gain, which was 29 per cent lower than the comparable figure last year. Sonera's results disappointed the investors as the new business subsidiaries (Zed, SmartTrust) made a FIM 600 million loss. Share price in Sonera fell clearly after the profits failed to meet the market expectations. Informing about considerable gainings from the selling of Sonera's stake in VoiceStream did not help either.

The Finnish mobile phone manufacturer, Nokia, posted record quarterly results in line with the consensus of analyst predictions. The results indicated a profit of FIM 16.219 billion for the first half of this year, a 65 % improvement over the same period last year. Since Nokia's results have in recent years routinely exceeded market expectations and as this result was only as good as has been expected, the result was, however, seen as a slight disappointment. In addition, there was a warning contained in the results which was the main factor leading to panic selling of the company's shares in Helsinki and New Your stock exchanges. Nokia announced that due to the timing of the new product introductions as well as seasonality the company's earnings per share of stock are projected to be lower in the third quarter than in the second quarter of the year.

Furthermore, the results of the IT services producers Tietoenator and Novo Group were also considered as slight disappointments as both companies were suffering from lack of demand after the peak related to Y2K. Most customer companies had already installed and repaired their data systems before the turn of the year 2000, which contributed in a negative way to the results of these services producers.

According to the majority of analysts one should note, however, that disappointing results reports do not constitute a trend but rather are related to certain individual companies. There are various factors having a potential influence on the stock price and it is difficult to define the ones, which would be common to all reported results. How-ever, it appears evident that the uncertainty in the stock market will continue.