Nokia profit plunges 90pc in first quarter
Sunday, 19 April 2009
HELSINKI, Apr 18 (AP): Nokia Corp. said Thursday profits plummeted 90 per cent in the first quarter because of fading demand for mobile phones amid the world economic downturn but its shares surged, because analysts had expected an even gloomier report.
The world's top mobile phone maker said net profit was only euro122 million ($161 million) compared to euro1.2 billion in the same period last year. Sales fell 27 per cent to euro9.3 billion ($12.2 billion) from euro12.7 billion.
Still, Nokia sold more phones than some had expected, and its shares jumped 9.4 per cent to close at euro11.08 ($14.60) in Helsinki.
"Although their performance was bad, it wasn't as bad as expected," said Neil Mawston from Strategy Analytics in London. "Everyone talked Nokia down, so there was a general relief that things weren't that bad after all."
Nokia sold 93 million mobile phones in the first quarter, down 19 per cent from 115 million in the year-ago period. Mawston said the market had been expecting volumes of 90-92 million.
"That seems to be the core driver" of the share price, Mawston said.
Investors were also relieved that Nokia held on to its market outlook for its key mobile device unit. That reinforced the sense that the market has bottomed out, said FIM Bank analyst Michael Schroeder.
"That's the impression we got from Nokia," he said. "There's also been a general assumption in recent weeks that there are certain lights now in selective markets," he said.
Nokia's market share was 37 per cent, unchanged from the previous quarter but down 2 per centage points from the first quarter of 2008. Meanwhile, the average selling price of Nokia phones dropped to euro65 ($86) from euro71 in the previous quarter and euro79 in the first quarter of 2008.
Nokia maintained its previous estimate that the mobile device market would shrink by 10 per cent this year and held on to its target of boosting market share. However, it downgraded its outlook for the network infrastructure market, saying it expects a 10 per cent contraction in 2009. Nokia, which has a joint network unit with Siemens AG of Germany, had earlier predicted that market would decline 5 per cent this year.
The world's top mobile phone maker said net profit was only euro122 million ($161 million) compared to euro1.2 billion in the same period last year. Sales fell 27 per cent to euro9.3 billion ($12.2 billion) from euro12.7 billion.
Still, Nokia sold more phones than some had expected, and its shares jumped 9.4 per cent to close at euro11.08 ($14.60) in Helsinki.
"Although their performance was bad, it wasn't as bad as expected," said Neil Mawston from Strategy Analytics in London. "Everyone talked Nokia down, so there was a general relief that things weren't that bad after all."
Nokia sold 93 million mobile phones in the first quarter, down 19 per cent from 115 million in the year-ago period. Mawston said the market had been expecting volumes of 90-92 million.
"That seems to be the core driver" of the share price, Mawston said.
Investors were also relieved that Nokia held on to its market outlook for its key mobile device unit. That reinforced the sense that the market has bottomed out, said FIM Bank analyst Michael Schroeder.
"That's the impression we got from Nokia," he said. "There's also been a general assumption in recent weeks that there are certain lights now in selective markets," he said.
Nokia's market share was 37 per cent, unchanged from the previous quarter but down 2 per centage points from the first quarter of 2008. Meanwhile, the average selling price of Nokia phones dropped to euro65 ($86) from euro71 in the previous quarter and euro79 in the first quarter of 2008.
Nokia maintained its previous estimate that the mobile device market would shrink by 10 per cent this year and held on to its target of boosting market share. However, it downgraded its outlook for the network infrastructure market, saying it expects a 10 per cent contraction in 2009. Nokia, which has a joint network unit with Siemens AG of Germany, had earlier predicted that market would decline 5 per cent this year.