Earnings: Nokia Net Profit Drops 90 Percent On Steep Fall In Q1 Sales
-
Comments (View)
- Text Size: A A
-
Email
-
Share
So much for a recovery in handset sales. Nokia (NYSE: NOK), the world’s largest handset manufacturer, reported worse-than-expected first-quarter net profit of €122 million euros ($161 million), a 90 percent drop compared to net earnings of €1.2 billion euros ($1.58 billion) a year ago. Earnings per share came in at a mere €0.03 euro ($0.04), compared to €0.32 euros ($0.42) a year ago. Its much watched sales also took a dive, dropping 27 percent to €9.3 billion euros ($12.2 billion), from €12.7 billion euros ($16.7 billion) a year ago. Nokia CEO Olli-Pekka Kallasvuo blamed the hit on revenues on the “extensive destocking by operators and distributors” of inventory already in the sales channels in Q1.
SEE ALSO: All Eyes On Nokia To See If Recovery Has Started For Mobile Phone Sales
As analysts had predicted, the one bright spot for Nokia was its touchscreen 5800 device. Though it was a latecomer compared to other touchscreen models from competing device makers, the comparatively cheap 5800 XpressMusic managed to sell 2.6 million units in the first quarter, and a total of over 3 million since its November 2008 launch. Nokia sold 93.2 million handsets during the first quarter, a 19 percent drop from a year earlier, which helped push its overall market share down to 37 percent, a 2 percent decline compared to a year ago.
More earnings details after the jump.
Nokia said it would continue its drive to diversify into internet services. The handset maker reported that net sales in its Services unit—which includes web services such as mobile maps and its music store—came in at €150 million euros ($197 million), up 79 percent year on year, but still a drop in the ocean of the company’s overall revenues. In a statement Kallasvuo said, “In what has been an exceptionally tough environment, we continue to invest in a focused manner in consumer internet services delivered across our broad portfolio of mobile devices. Combined, these solutions will drive our future growth.” The CEO also cited the success of Nokia’s 5800 XpressMusic: “Together with Comes With Music, it is a great example of Nokia providing solutions that consumers value.”
According to a Bloomberg survey of analysts, profit had been expected to hit €232 million euros ($305 million), while sales were estimated to come in at €9.8 billion euros ($12.9 billion). Analysts had also been looking for signs that the slump in mobile phones might be recovering after the previous quarters dismal performance from the leading handset makers.
Additional Highlights from Nokia’s Q1 Earnings:
Average Selling Price (ASP) Down: Nokia mobile device ASP of €65 euros ($86), down from €71 euros ($93) in Q4 2008.
Forecasts: Nokia said it expected mobile device volumes in Q2 to remain at the same level as Q1, or to edge slightly higher than Q1. It also said it expects its share of the mobile market to increase sequentially from Q1. Overall, it expects 2009 mobile device volumes for the entire industry to drop 10 percent from 2008 levels, with the first half of the year harder hit.
iTunes Songs
Social Standing
Which media brands are getting a lift from Tweeters and bloggers right now -- and which are getting panned?
Show Me: