Nokia profits fall 20 percent on painful price cuts

IDG News Service |  Mobile & Wireless

Nokia Corp. reported a 20 percent decline in net profit for the third quarter on Thursday, due largely to cuts it made in the prices for its mobile phones. The Finnish handset manufacturer predicted that earnings would fall again in the fourth quarter.

Nokia reported third-quarter net sales of €6.94 billion (US$8.56 billion as of Sept. 30, the last day of the period being reported), up 1 percent from €6.87 billion in the year-ago period.

Net profit fell to €660 million, or €0.14 a share, from €823 million, or €0.17 a share, in the third quarter of 2003, the company said.

Net sales from Nokia's mobile phone division dropped 13 percent year-over-year, to €4.43 billion. The Espoo, Finland, company has been battling increased competition in the past year, with rivals improving their handsets and lowering prices.

Nokia sold a total of 51.4 million mobile devices in the quarter. It estimated that 158 million mobile devices were sold by the industry as a whole, driven mainly by replacements of older handsets in Europe and North America.

Nokia said it was able to claim back some of its recently lost market share, which now stands at 33 percent, according to its preliminary estimate. Its share in the first quarter was 32 percent, and in the second it was 31 percent. The third-quarter gain came from growth in Western Europe and from holding its market position in China, Nokia said. It conceded that its sales declined significantly in North America and slightly in Latin America.

Nokia's multimedia, networks and enterprise solutions divisions all boosted net sales for the third quarter, the company said.

The multimedia division, which includes its N-Gage portable gaming machines, posted net sales of €914 million, almost double the figure from the year earlier. It began selling several new products during the quarter, including a remote camera and wireless GPS (Global Positioning System) module, and a range of wireless Bluetooth headsets and in-car communication kits.

Sales from the networks group grew 21 percent to €1. 47 billion, while the enterprise solutions division grew 52 percent, to €172 million, Nokia said.

The company forecast net sales for the fourth quarter of between €8.4 billion and €8.6 billion, or between €0.16 to €0.18 per share. Fourth-quarter net sales for 2003 were €8.8 billion, or €0.25 per share.

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