Nokia Q4 Profit Slumps 69% - Warns of Difficult 2009

Nokia has reported that its fourth-quarter sales dropped by 19% to €12.7 billion (US$16.4 billion) and profits slumped by a huge 69% to €576 million (US$744 million), compared to a profit of €1.84 billion (US$2.4 billion) a year ago. Analysts polled by Bloomberg News had estimated profit of €975 million on sales of €13.1 billion.

Nokia' mobile phone sales were down 15% year on year at 113.1 million units - and down 4% sequentially.

Nokia CEO, Olli-Pekka Kallasvuo said "In recent weeks, the macroeconomic environment has deteriorated rapidly, with even weaker consumer confidence, unprecedented currency volatility and credit tightness continuing to impact the mobile communications industry. We are taking action to reduce overall costs and to preserve our strong capital structure. This is clearly our top priority in the current economic environment. However, it is important for Nokia to continue investing at the proper pace in future growth. We believe Nokia has a tremendous opportunity to capture value as the Internet services market evolves and grows,"

The company warned that more limited availability of credit also reduced the purchasing ability of some its trade customers.

Nokia said that it expects industry mobile device volumes in the first quarter 2009 to decline sequentially to a greater extent than the seasonal sequential decrease in the first quarter of the past few years, although its own mobile device market share in the first quarter 2009 should be at approximately the same level sequentially.

While noting the extremely limited visibility, Nokia now expects 2009 industry mobile device volumes to decline approximately 10% from 2008 levels. Nokia expects the decline to be greater in the first half than in the second half of the year. This is an update to Nokia's earlier estimate that 2009 industry mobile device volumes would decline 5% or more from 2008 levels.

Nokia phone sales by region

Based on their preliminary market estimate, Nokia's mobile device market share for the fourth quarter 2008 was 37%, compared with 40% in the fourth quarter 2007 and 38% in the third quarter 2008.

The year on year market share decline was driven primarily by lower market share in Middle East & Africa, Greater China, North America and Asia-Pacific. This was partially offset by slightly higher market share in Europe and Latin America.

Nokia believes that, due to extreme currency volatility, its  market share in the fourth quarter 2008 in some geographic areas may have been affected by products being re-routed by the distribution channels for sale to consumers in other geographic areas, particularly in Europe and Middle East & Africa.

Nokia Siemens Networks net sales of €4.3 billion (US$5.6 billion), down 5% year on year and up 24% sequentially (down 4% and up 23% at constant currency). Nokia and Nokia Siemens Networks continue to expect the mobile infrastructure and fixed infrastructure and related services market to decline 5% or more in Euro terms in 2009, from 2008 levels.

Posted to the site on 22nd January 2009