Not Per Lindberg. The London-based Dresdner Kleinwort Wasserstein analyst warned last month that Nokia could incur quarterly charges as high as E150 million ($133 million) because of skyrocketing defect rates on the display screens on several of its handset models and that this would slice into its profits.
Tapio Hedman, head of Nokia’s mobile handset division, dismissed Lindberg’s claims as “bordering on the ridiculous” and suggested that the analyst was trying to use Nokia to bolster his own reputation. The company insisted that the problems affected only a small proportion of its handsets; the subcontractor responsible for the faulty component would bear the costs, Nokia said.
Lindberg, 40, stands by his conclusions , and by his long-standing sell recommendation on Nokia. “We are not creating this problem,” he says. “We are just fulfilling our professional duty as analysts, which I think more analysts should do with Nokia.” The former Ericsson executive gained attention last year for stating that Marconi’s shares were virtually worthless, before the company’s collapse.
Nokia recently sliced its sales forecast, explaining that consumers were delaying purchases. The company’s shares fell on the news, and analysts cut their own forecasts. CEO Jorma Ollila said that Nokia had resolved the screen problem but conceded that making handsets has become more complicated.
Lindberg takes this as a “tacit admission” that the screen troubles were worse than Nokia acknowledged. What’s more, he contends, mobile handsets are being commoditized, just like PCs, and Nokia , which has the industry’s fattest margins , has the most at stake. “This will lead to market share losses and much reduced pricing power,” says Lindberg. Nokia disputes this, saying brand strength and operating efficiencies protect its phone margins.
