Nokia misses forecasts, profit drops 69 p.c in Q4

HELSINKI, FINLAND: Mobile phone giant Nokia announced a 69 per cent dip in its not profit for the quarter ended December 31, 2008.

While the net profit for the quarter was $743.62 million (€576 million), down from $2.39 billion (€1.84 billion) in the corresponding quarter of 2007, net sales plunged to $16.94 billion (euro 12.7 billion) in the quarter under review from $20.5 billion (euro 15.8 billion) in the corresponding period a year ago.

Analysts had expected income of around EUR 970 million and sales of around EUR 13 billion. Thus results were poorer than expected, albeit within the range of some estimates.

Nokia said in a release that its market share fell to 37 per cent, down from 40 per cent in the fourth quarter of 2007, and 38 per cent in the third quarter in 2008.

In the quarter under review, the total number of mobile handset sale by Nokia's Devices and Services group stood at 113.1 million units, down by 15 per cent year on year, the statement added.

The company gave a bleak outlook for the industry in Thursday's earnings report, saying it expects global mobile device volumes to drop 10 per cent in 2009 compared to last year.

Owing to the worse-than-expected dive in fourth-quarter profit, Nokia warned market volumes would shrink 10 per cent this year as the economic slowdown hits consumer spending.

"In recent weeks, the macroeconomic environment has deteriorated rapidly with even weaker consumer confidence, unprecedented currency volatility and credit tightness continue to impact mobile communication industry. We are taking action to reduce overall costs and to preserve our strong capital structure," Nokia chief executive officer Olli-Pekka Kallasvuo said.

On cost cutting and staff reduction, Nokia CFO said, “We do not have specific reduction announcements to make today. However, the targeted reductions will encompass the the areas mention (at) the capital markets day. In R&D we will continue to focus on portfolio pruning and prioritisation. We will invest in services at a slower pace and an increasingly focused way."

Nokia also said the company and its industry partners would develop Symbian OS, which it had taken over, into an open and unified mobile software platform, which will be licensed royalty-free and eventually move towards ‘open source’.