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Nokia Reports Sharp Jump in Q3 Profits
Nokia has posted a sharp rise in its third quarter profit after it boosted its handset market share to 39%. Nokia's third quarter 2007 net sales increased 28% to €12.9 billion (US$18.3 billion), compared with €10.1 billion (US$14.3 billion) in the third quarter 2006. At constant currency, group net sales would have increased 32%. Nokia's third quarter 2007 operating profit surged by 69% to €1.9 billion (US$2.7 billion).
Excluding special items, Nokia's third quarter 2007 operating margin was 14.6%.
Mobile Phones
The company said that it shipped 111.7 million mobile phones, up 11% sequentially and up 26% year on year. Nokia estimated that its device market share ended at 39%, up from 38% in Q2 2007 and up from 36% in Q3 2006. Total device operating margin, and Mobile Phones gross margin, increased sequentially, despite Nokia's total device ASP of EUR82 decreasing from EUR90 in Q2 2007.
Nokia expects that the mobile device market volume will be approximately 1.1 billion units in 2007, up from the approximately 978 million units Nokia estimated for 2006.
Nokia shipped well over 9 million Nokia NSeries and almost 2 million Nokia ESeries devices during the third quarter 2007.
Nokia's year on year market share increase was driven primarily by strong gains in Europe, Middle East & Africa, Asia-Pacific and China. Nokia's market share decreased year on year in Latin America and North America. Nokia had strong sequential market share gains in North America and to a lesser degree in China and Asia-Pacific. Nokia's market share decreased sequentially in Europe, Latin America and Middle East & Africa. Nokia's device volumes for the third quarter 2007 were somewhat constrained by component shortages, which continue to some degree in the fourth quarter 2007. In a strongly growing market, these component shortages are linked to the expected high demand for Nokia products and seasonal industry growth in the fourth quarter.
Nokia Siemens Networks
Third quarter 2007 net sales were €3.7 billion (US$5.3 billion). The third quarter 2007 results of Nokia Siemens Networks are not directly comparable to the third quarter of 2006 as it included the former Nokia Networks business group only. However, net sales were up 7% compared to the second quarter of 2007, which was the first quarter of operations for Nokia Siemens Networks.
Nokia has also updated its previous estimate of €1.5 billion (US$2.1 billion) in charges associated with cost synergies for Nokia Siemens Networks, and such charges are now estimated to be slightly above €2 billion (US$2.8 billion). The company did also note that it also increased its expected cost savings from the merger to €1.5 billion of annual cost synergies by the end of 2008. The total restructuring charges recorded by the end of the third quarter 2007 are €991 million.
Posted to the site on 18th October 2007