Nokia Q3 earnings drops 28 percent, revenue drops 5 percent

Nokia reported third-quarter earnings down 28 percent on a year earlier, and revenue down 5 percent. Its share of the mobile phone market slipped too.

Revenue for the quarter ended September 30 totalled €12.24 billion (US$17.68 billion), a figure which will disappoint analysts who had expected something nearer $18.59 billion.

The company reported net profit of €1.09 billion, down from €1.56 billion a year earlier.

During the quarter Nokia closed its acquisition of Navteq, a distributor of digital maps for GPS (Global Positioning System) terminals, bringing it additional sales of €156 million but an operating loss of €80 million.

Nokia sold 117.8 million mobile devices in the third quarter, giving it 38 percent of a market it estimates at 310 million devices. That's down from a share of 39 percent a year earlier, and 40 percent in the second quarter, it said.

Phone sales rose 13.9 percent year on year to 33.6 million in Nokia's largest regional market, Asia-Pacific, but declined 5.5 percent to 27.4 million in Europe. Nokia sold 19.8 million phones in Greater China, up 4.8 percent year on year despite a dip there in the second quarter.

The company had warned in early September that it expected its market share to drop as it refused to engage in a price war with other manufacturers.

"We will move to maximize our bottom line with the right combination of margin and market share," said President and CEO Olli-Pekka Kallasvuo in a conference call with analysts.

One factor affecting Nokia's results is a move to cheaper handsets: handset sales for the quarter rose 8 percent by volume compared to a year earlier, but dropped 7 percent by value.

"There's only one way average selling prices can go -- and that's down," said Gartner research director Carolina Milanesi.

The average selling price of Nokia's phones slipped to €72 in the third quarter, from €74 in the second quarter and €82 in the third quarter of 2007, the company said.

Nokia's flagship N96 smartphone will be struggling in this market, Milanesi said. Its over-long feature list, including a digital TV receiver that won't work in many European countries, makes it expensive to manufacture at a time when operators are being more careful about how they subsidize phones for new customers.

Despite the economic downturn, Nokia sees itself as "well positioned for the current times," it said.

The company still expects the mobile phone market to grow -- to 1.26 billion units this year from 1.14 billion in 2007, and it sees its share of that market remaining steady or rising in the fourth quarter.

Sign up for ITworld's Daily newsletter
Follow ITworld on Twitter @IT_world

• Email
• Print
• Share
  • Slashdot
  • Digg
  • Stumble
  • Reddit
  • Newsvine