Fri, Oct 17, 2008 - Page 11 News List

Nokia profit falls 30%, revenue slips

AP , HELSINKI

Nokia Corp reported yesterday a 30 percent plunge in third-quarter profit as the company saw market share dip to 38 percent and its revenue fall by 5 percent.

The world’s largest mobile phone maker said net profit in July through last month fell to 1.09 billion euros (US$2.7 billion), from 1.56 billion euros a year earlier. Net sales dropped to 12.2 billion euros.

The average price of Nokia handsets — a much-watched indicator in the industry — also continued to fall, to 72 euros, from 74 euros in the previous period.

In the third quarter last year, the average selling price was 82 euros.

Nokia stock plunged nearly 4 percent to 11.32 euros in Helsinki in afternoon trading.

Nokia said its market share in the period fell to 38 percent — down from 39 percent last year and 40 percent in the previous quarter.

It sold almost 118 million handsets, up from 112 million during the same period last year but down from 122 million in the second quarter.

Last month, Nokia warned that market share would drop because of price cuts by competitors, but said it would not change its strategy.

“Multiple factors contributed to the sequential decline in our mobile device market share ... [including] our tactical decision not to meet certain aggressive pricing of some competitors,” Nokia said yesterday.

Michael Schroeder, analyst at FIM Bank said “the worst-case scenario did not materialize.”

“There is good and bad in this report. Nokia still sees a growth in full-year mobile phone sales ... so there’s really no halt in the trade there,” Schroeder said.

“But its market share expectations of flat or slightly up is a disappointment,” he said.

The average price of Nokia handsets dropped because of a high proportion of lower-end phones sold in emerging markets, and the negative impact of a weaker US dollar, Nokia said.

Despite the global financial meltdown, the Finland-based company said it expects sales to increase in the final quarter with a possible slight gain in market share. It gave no figures.

“With our scale, brand, improving product portfolio and low cost structure, we believe Nokia is well positioned for the current times,” CEO Olli-Pekka Kallasvuo said.

The Finland-based industry bellwether estimated that total industry sales would grow to 1.26 billion devices by the end of the year — up from 1.14 billion units last year.

Last year, Nokia sold nearly 440 million handsets, accounting for 40 percent of all global cellphone sales.

It is based in Espoo near the Finnish capital and employs 116,000 people worldwide.

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