Nokia posts 25% profit increase; investors unhappy
17 April 2008
Nokia posts 25% profit increase; investors unhappy
The Finnish handset giant that is Nokia posted a 25 per cent increase in net profit for the first quarter on Thursday morning. But unbelievably, earnings of Eur1.22bn still managed to miss analyst estimates.
Apparently you can't please everyone. At the time of posting, the company's share price had taken an 8 per cent dive on the back of the news.
Nevertheless, it will probably be with a certain assuredness that Nokia CEO, Olli-Pekka Kallasvuo, will announce a 28 per cent increase in net sales, taking revenues for the company up to Eur12.66bn.
With the handset industry coming out of the post December lull, the Finnish firm lost a percentage point on its market share, falling to 39 per cent in the first quarter, compared to 40 per cent in the last period of 2007.
Nokia shipped device volumes of around 115.5 million units, up 27 per cent year on year and down 13 per cent sequentially, resulting in a 50 per cent year on year increase in operating profit for the Devices & Services segment.
However, the second and third quarters are traditionally moderate for handset sales, and the absence of any forthcoming flagship products will not help Nokia's cause. "While we will not have major new products shipping in the second quarter, we expect a number of new products to be shipping, and to have a positive impact on our results, in the second half of 2008," said Kallasvuo.
The vendor is also fighting a continual struggle in North America, where its tentative foothold seems permanently in danger of slipping. Market share in the US fell 49 per cent year on year.
The weakening dollar also hit the average selling price (ASP) of handsets, which fell from Eur89 in the first quarter of 2007 to Eur79 in the same period this year, assisted by sales of a higher proportion of lower priced products.
The Nokia Siemens Networks joint venture posted an operating loss of Eur74m, although sales more than doubled from Eur1.7bn in the first quarter of 2007 to Eur3.4bn this year.
The firm also shelled out Eur81m in charges related to the closure of the Bochum handset manufacturing plant in Germany, but did not include the people related costs of Eur200m, which are expected to be recorded during the subsequent periods in 2008.
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