Nokia says profit rose 44 percent

Nokia Oyj, the world's biggest maker of mobile phones, said fourth-quarter profit increased 44 percent as it took market share and shipments rose to a record.

Net income rose to 1.84 billion euros, or 47 cents a share, from 1.27 billion euros, or 32 cents, a year earlier. Sales rose 34 percent to 15.7 billion euros, Espoo, Finland-based Nokia said yesterday in an e-mailed statement. Profit was estimated to be 1.51 billion euros, or 41 cents a share, on sales of 14.9 billion euros, based on the averages of 17 analysts' predictions compiled by Bloomberg.

Nokia, led by Chief Executive Officer Olli-Pekka Kallasvuo, took market share from Motorola Inc and increased margins with devices ranging from phones costing less than $50 to handsets with satellite navigation. Growth was held back by Nokia Siemens Networks, the telecommunications network equipment venture formed with Siemens AG in April, which is cutting jobs as industry demand wanes.

"Nokia is certainly benefiting from Motorola's weakness," Matthias Maus, an analyst at BHF Bank AG in Frankfurt, said before the report.

Before yesterday, Nokia shares had fallen 22 percent this year in Helsinki, while the Dow Jones Stoxx 600 Index for Europe's biggest companies fell 16 percent. Nokia gained 71 percent last year, its best performance since 1999. Motorola shares have lost 38 percent this year, including a 19 percent slide on Wednesday when the Schaumburg, Illinois-based company forecast an unexpected loss.

Dominant position

Nokia's market share in the third quarter was higher than its three biggest competitors - Motorola, Samsung Electronics Co and Sony Ericsson Mobile Communications Ltd - combined, according to market researcher Gartner Inc.

Samsung Electronics, which overtook Motorola last year as the second-biggest mobile-phone maker, reported a 67 percent increase in fourth-quarter earnings at its telecommunications unit. Samsung's unit shipments rose 41 percent to a record.

On Wednesday, Motorola reported an 84 percent decline in fourth-quarter profit and forecast an unexpected loss for this quarter as it lost market share. The company has suffered after failing to find models to match the success of the Razr and retreating from competing on price in emerging markets.

Apple Inc said last week it had sold more than 4 million iPhones since the introduction in June. Nokia said the iPhone has increased general interest in advanced phones, known as converged devices, a market where it says it has about 50 percent share.

Nokia Chief Financial Officer Rick Simonson said in November the company's third-quarter gross margin in entry-level phones, which are mainly sold in markets such as China and India and typically cost about 30 euros, was close to the one achieved by Sony Ericsson, which focuses on high-end devices.

Nokia boosted its operating margin at the device units to about 22 percent in the third quarter from 13 percent a year earlier.

The network venture with Siemens has suffered as phone companies pared spending on their grids.

Ericsson AB, the world's biggest maker of wireless networks, said in November fourth-quarter sales were likely to be at the lower end of its forecast range, citing "tightening" markets in Europe and North America. Alcatel-Lucent SA, the world's biggest maker of telecommunications equipment, deepened job cuts in October after it reported a third straight quarterly loss and reduced its sales forecast.

Nokia grouped its Internet services, which include music, maps and games, under the Ovi brand to generate revenue outside its traditional handset business and increase its grip on existing customers. The company also plans to introduce models with touch screens and have more devices equipped with navigation capabilities this year.

The company's recent Internet-related acquisitions include mobile advertising company Enpocket and Avvenu, whose services allow customers to share personal computer files wirelessly and securely.

Agencies

(China Daily 01/25/2008 page17)