For The First Quarter, Nokia Currently Expects to Report Solid Growth and Good Profitability - Despite a More Challenging Business Environment.

Business Editors

HELSINKI, Finland--(BUSINESS WIRE)--March 15, 2001

During the last few months, in a period of difficult market conditions, Nokia has been able to strengthen its leadership position in mobile communications. Nokia Networks has won several agreements to deliver third generation mobile network technology, and is targeting the leading position in that market. In addition, Nokia's strong product portfolio and superior execution in mobile phones have helped it widen its market leadership to above the level of 32% achieved in 2000.

Nokia Chairman and CEO Jorma Ollila said: "We feel confident about our strengths and our performance during the early months of the year. Despite the more difficult market conditions, we have been able to show good progress. We expect to see solid growth for the first quarter as a whole, with better than anticipated margins".

Based on the first two months of 2001, Nokia estimates that it is likely to reach an EPS of approximately 0.19 EUR for the first quarter, in line with its earlier statements. Also for the first quarter, the company expects year-on-year sales growth in Nokia Networks to be 30-35% and in Nokia Mobile Phones 15-20%. This would lead to a total sales growth of about 20%, compared to our earlier estimate of 25-30%. All of these estimates are naturally subject to market developments in the final weeks of the quarter.

The slower than expected sales growth in the first quarter is mainly due to the stronger than anticipated impact of demanding market conditions. Especially in the United States, economic uncertainty has increased during the last weeks. Due to the slower growth and more difficult market conditions during the first months of the year, we now estimate that the full year 2001 mobile phone market size will be between 450 and 500 million units.

"More challenging times like these test your mettle as a company. We believe that truly great companies emerge from challenging times much stronger. Nokia's market position and exceptionally strong product portfolio have enabled it to thrive in today's demanding business environment. We will continue to fully capitalize on our industry-leading market position to exploit the volume benefits in product development, brand, distribution and purchasing power", commented Mr. Ollila.

Nokia will continue its strategy of aggressively gaining market share without compromising profitability. The company sees many opportunities in the market and will use its strengths to serve its customers in the best possible way, even in tightening economic conditions. Our own inventory levels as well as the levels of Nokia-manufactured phones in the sales channels are lower than at year end, allowing us a healthy flow of deliveries.

Nokia has reacted to the changing market conditions by accelerating its ongoing programs to generate further efficiencies from operations and find additional cost savings. These measures are conducted in a complementary way across businesses, without jeopardizing the needed investments into research and product development as we move towards next generation technologies. Nokia continues to achieve a strong positive cash-flow from its operations for the current quarter.

As to the second quarter and full year business outlook in the context of these developments, we are currently forming our opinion, which will be communicated along with our full first quarter results on April 20.

It should be noted that certain statements herein which are not historical facts, including, without limitation those regarding 1) the Company's ability to develop new products and technologies; 2) expectations regarding market growth and developments; 3) expectations for growth and profitability; and 4) statements preceded by "believes", "expects", "anticipates", "foresees", or similar expressions, are forward-looking statements. Because such statements involve risks and uncertainties, actual results may differ materially from the results currently expected by the Company. Factors that could cause such differences include, but are not limited to 1) general economic conditions, such as the rate of economic growth in the Company's principal geographic markets or fluctuations in exchange rates; 2) industry conditions, such as the strength of product demand, the intensity of competition, pricing pressures, the acceptability of new product introductions such as Internet-ready phones, the introduction of new products by competitors, the impact of changes in technology, including the Company's success in the emerging 3G market, the ability of the Company to source components from third parties without interruption and at reasonable prices, demand for vendor financing and the Company's ability and willingness to provide such financing, and the success and financial condition of the Company's strategic partners and customers; 3) operating factors, such as continued success of manufacturing activities and the achievement of efficiencies therein, continued success of product development or inventory risks due to shifts in market demand; as well as 4) the risk factors specified on pages 21 to 23 of the Company's Form 20-F for the year ended December 31, 1999.