Phone
Nokia made a profit of euro1.09 billion in the same quarter of 2008.
Nokias net sales in July to September dropped to euro9.81 billion, from euro12.2 billion in the same period last year, partly due to a shortage of components across its product portfolio, Nokia said.
The companys share price plummeted 10 percent to euro9.27 ($13.78) in late trading in Helsinki.
Nokia booked a euro908 million charge at Nokia Siemens Networks. The write-down reflects the companys recognition that it wont recover its investment in the joint venture it formed with Siemens AG in 2007 because of more difficult conditions in the industry and likely lower profitability.
But it upgraded estimates for the network infrastructure market, predicting a 5 percent fall in euro terms in 2009, compared to an earlier estimate of a 10 percent decline. It also said it expects Nokia Siemens Networks loss in market share to be bigger than its previous forecast of a “moderate decline.”
“We are really working hard at Nokia Siemens Networks to make it a significant part, as it should be, of the profitability of Nokia, and Siemens too,” Nokia CEO Olli-Pekka Kallasvuo said. “In many ways, Im sure theres room for new thinking here.”
The mobile phone industry has been hit hard by the financial crisis, but Nokia said it expects a halt in the decline in demand of the mobile sector in the fourth quarter. It raised its 2009 forecast for mobile phone volumes, saying it now expects a 7 percent decline from the previous year, rather than the 10 percent fall it had earlier predicted.
“I think that consumers will again begin to realize that mobile phones are a necessity and that they need to buy new ones and replace their old models,” Kallasvuo said. “Also, interest in smart phones has grown.”
Neil Mawston from Strategy Analytics said Nokias results were a “mixed bag” but was good news for the industry.
“Nokias volumes were reasonable but its profits were not quite so good,” Mawston said. “It was pretty much in line with our forecasts.”
Mawston said Nokias revised estimates of a slight improvement in the mobile phone sector was in line with expectations of the London-based research and consulting firm.
“Our sense is that Q1 was the very bottom of the market and we are just seeing a steady, slow, gradual recovery after that,” Mawston said. “There is an outside chance that we may see positive growth in Q4 … but by the first quarter 2010 I think the industry will be back just about in positive trajectory.”
A household name in Asia and Europe, Nokia is a smaller player in the United States, where its smartphones face tough competition from Apple Inc. and Research in Motion Ltd., the makers of the iPhone and BlackBerry.
Kallasvuo said the company will introduce four new touch-screen handsets in the current quarter. Last month, it unveiled a new netbook and handsets that boast more music features and mesh better with Facebook.
The average selling price of Nokia handsets, which has been steadily falling since 2004, was euro62 in the quarter – down from euro72 in 2008, but unchanged from the second quarter of this year. Analysts have predicted that it will remain at euro62 in the full year, suggesting a halt in the gradual decline.