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Nokia Reported Loss Of €559 Million And Disappointing Smartphones Results For The Third Quarter

Thursday, 15 October 2009 12:11

Written by Apocalypso.

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pressure Nokia Corp. , the world's largest mobile phone maker, Thursday reported a worse than expected financial results for the third quarter 2009, with a loss of 559 million euro in the, taking hits from a 20 percent drop in sales but raised its outlook for mobile device industry volumes in 2009.

Based on preliminary market estimate, Nokia's mobile device market share for the third quarter 2009 was 38%, compared with 38% in the third quarter 2008 and in the second quarter 2009. Our year on year market share was higher in Europe, Latin America and Middle East & Africa.

This was offset by lower market share in Greater China, Asia-Pacific and North America. Sequentially, our market share declined in Greater China, Asia-Pacific, Middle East & Africa and North America, but was offset by our increased market share in Europe and Latin America.

Nokia mobile device average selling price (ASP) in the third quarter 2009 was EUR 62, down from EUR 72 in the third quarter 2008 and at the same level as in the second quarter 2009. The year on year decline was primarily due to a higher proportion of sales of lower priced products as well as general price pressure. Sequentially, our ASP benefited from new product shipments, offset however by general price pressure.

Third quarter 2009 Devices & Services net sales declined 20% to EUR 6.9 billion, compared with EUR 8.6 billion in the third quarter 2008. Devices & Services net sales were down year on year in all geographic areas. At constant currency, Devices & Services net sales would have decreased 20%. The net sales decline resulted primarily from lower volumes, combined with the ASP decline, compared with the third quarter 2008.

OLLI-PEKKA KALLASVUO, NOKIA CEO: "The demand for mobile devices improved in many markets during Q3. With the average selling price of our devices holding firm quarter-on-quarter, our higher device volumes translated into increased net sales in our Devices & Services business. Our volumes and net sales were, however, somewhat constrained by component shortages we encountered across the portfolio. I also want to highlight the good operating expense management that helped the segment deliver solid earnings.

The challenging competitive factors and market conditions in the infrastructure and related services business necessitated non-cash impairment charges at Nokia Siemens Networks. We continue to support Nokia Siemens Networks actions to improve its performance."


Nokia is also providing ASPs for each of these two categories of sales. Net sales from smartphones and mobile computer solutions totaled EUR 3.1 billion in the third quarter 2009, at the same level as in the second quarter 2009. The ASP for smartphones and mobile computer solutions was EUR 190, up from EUR 182 in the second quarter 2009. Net sales from mobile phones and embedded services totaled EUR 3.8 billion in the third quarter 2009, compared with EUR 3.5 billion in the second quarter 2009. The ASP for mobile phones and embedded services was EUR 41, at the same level as in the second quarter 2009.

Devices & Services reported gross profit and non-IFRS gross profit decreased 32% to EUR 2.1 billion, compared with EUR 3.1 billion in the third quarter 2008, with a reported and non-IFRS gross margin of 30.9% (36.5%). The year on year gross margin decrease was primarily due to higher cost of sales driven by a stronger Japanese Yen, as well as general price pressure.

During the third quarter 2009, Devices & Services reported operating profit decreased 51% to EUR 785 million, compared with EUR 1.6 billion in the third quarter 2008, with a reported operating margin of 11.4% (18.6%). Devices & Services non-IFRS operating profit decreased 51% to EUR 787 million, compared with EUR 1.6 billion in the third quarter 2008, with a non-IFRS operating margin of 11.4% (18.6%). The year on year decrease in non-IFRS operating profit for the third quarter 2009 was due primarily to lower net sales and higher cost of sales compared with the third quarter 2008. These factors were somewhat mitigated by a reduction in our operating expenses, compared to the third quarter 2008.?

THIRD QUARTER 2009 HIGHLIGHTS

  • Nokia net sales of EUR 9.8 billion, down 20% year on year and down 1% sequentially (down 19% and flat at constant currency).
  • Devices & Services net sales of EUR 6.9 billion, down 20% year on year and up 5% sequentially (down 20% and up 6% at constant currency), and nonIFRS operating margin of 11.4% (18.6% in Q3 2008 and 12.2% in Q2 2009).
  • Devices & Services gross margin of 30.9%, down from 34.0% in Q2 2009.
  • Services net sales of EUR 148 million (billings of EUR 172 million). Due to the divestment of the security appliance business in April 2009, services net sales are not directly comparable to prior periods.
  • Estimated industry mobile device volumes of 288 million units, down 7% year on year and up 7% sequentially.
  • Nokia mobile device volumes of 108.5 million units, down 8% year on year and up 5% sequentially.
  • Nokia estimated mobile device market share of 38% in Q3 2009, at the same level as in Q3 2008 and in Q2 2009.
  • Nokia mobile device ASP of EUR 62, at the same level as in Q2 2009.
  • NAVTEQ nonIFRS net sales of EUR 166 million, up 6% year on year and up 12% sequentially, and nonIFRS operating margin of 25.9% (18.5% in Q3 2008).
  • Nokia Siemens Networks net sales of EUR 2.8 billion, down 21% year on year and down 14% sequentially (down 20% and down 14% at constant currency), and nonIFRS operating margin of 1.9% (5.1% in Q3 2008).
  • Nokia operating cash flow of EUR 720 million.
  • Total cash and other liquid assets of EUR 7.4 billion at the end of Q3 2009.
The complete press release with tables is available at:


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Source: Nokia press office

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