Nokia Q3 2009 Net Sales EUR 9.8 Billion, Non-IFRS EPS EUR 0.17 (Reported EPS EUR -0.15)

The complete press release with tables is available at: http://www.nokia.com/results/Nokia_results2009Q3e.pdf

Note 1 relating to NAVTEQ: Nokia completed the acquisition of NAVTEQ Corporation on July 10, 2008. Accordingly, NAVTEQ's results for the third quarter 2008 are not directly comparable to those for the third quarter 2009.

Note 2 relating to non-IFRS results: Non-IFRS results exclude special items for all periods. In addition, non-IFRS results exclude intangible asset amortization, other purchase price accounting related items and inventory value adjustments arising from i) the formation of Nokia Siemens Networks and ii) all business acquisitions completed after June 30, 2008. More specific information about the exclusions from the non-IFRS results may be found in this press release on pages 3, 14-16 and 18.

Nokia believes that these non-IFRS financial measures provide meaningful supplemental information to both management and investors regarding Nokia's performance by excluding the above-described items that may not be indicative of Nokia's business operating results. These non-IFRS financial measures should not be viewed in isolation or as substitutes to the equivalent IFRS measure(s), but should be used in conjunction with the most directly comparable IFRS measure(s) in the reported results. A reconciliation of the non-IFRS results to our reported results for Q3 2009 and Q3 2008 can be found in the tables on pages 11 and 14-18 of this press release. A reconciliation of our Q2 2009 non-IFRS results can be found on pages 10 and 13-17 of our Q2 2009 Interim Report of July 16, 2009.

Note 3: Nokia reported net sales were EUR 28 996 million and earnings per share (diluted) were EUR -0.02 for the period from January 1 to September 30, 2009. Further information about the results for the period from January 1 to September 30, 2009 can be found in this press release on pages 10, 12, 19-20 and 22.

OLLI-PEKKA KALLASVUO, NOKIA CEO:

"The demand for mobile devices improved in many markets during Q3. With the average selling price of our devices holding firm quarter-on-quarter, our higher device volumes translated into increased net sales in our Devices & Services business. Our volumes and net sales were, however, somewhat constrained by component shortages we encountered across the portfolio. I also want to highlight the good operating expense management that helped the segment deliver solid earnings.

The challenging competitive factors and market conditions in the infrastructure and related services business necessitated non-cash impairment charges at Nokia Siemens Networks. We continue to support Nokia Siemens Networks actions to improve its performance."

THIRD QUARTER 2009 FINANCIAL HIGHLIGHTS

(Comparisons are given to the third quarter 2008, unless otherwise indicated.)

Q3 2009 taxes - EUR 432 million valuation allowance for Nokia Siemens Networks deferred tax assets impacting Nokia taxes

Non-IFRS results exclude special items for all periods. In addition, non-IFRS results exclude intangible asset amortization, other purchase price accounting related items and inventory value adjustments arising from i) the formation of Nokia Siemens Networks and ii) all business acquisitions completed after June 30, 2008.

Nokia Group

Nokia's third quarter 2009 net sales decreased 20% to EUR 9.8 billion, compared with EUR 12.2 billion in the third quarter 2008. At constant currency, Group net sales would have decreased 19% year on year.

The following chart sets out the year on year and sequential growth rates in our net sales on a reported basis and at constant currency for the periods indicated.

Nokia's third quarter 2009 reported operating loss was EUR 426 million, compared with an operating profit of EUR 1.5 billion in the third quarter 2008. Nokia's third quarter 2009 non-IFRS operating profit decreased 58% to EUR 741 million, compared with EUR 1.8 billion in the third quarter 2008. Nokia's third quarter 2009 reported operating margin was -4.3% (12.0%). Nokia's third quarter 2009 non-IFRS operating margin was 7.6% (14.3%).

Operating cash flow for the third quarter 2009 was EUR 720 million, compared with EUR 1.3 billion in the third quarter 2008. Total cash and other liquid assets were EUR 7.4 billion at September 30, 2009, compared with EUR 7.2 billion at September 30, 2008. At September 30, 2009, Nokia's net debt-equity ratio (gearing) was -15%, compared with -18% at September 30, 2008.

Devices & Services

In the third quarter 2009, the total mobile device volumes of our Devices & Services group were 108.5 million units, representing a decline of 8% year on year and a 5% increase sequentially. The overall industry mobile device volumes for the same period were 288 million units based on Nokia's preliminary estimate, representing a 7% year on year decrease and a 7% sequential increase. The lower device volumes year on year for Nokia and the industry continued to be driven by the negative impact of the deteriorated global economic conditions. The sequential industry device volume increase primarily reflected an improved demand environment for mobile devices. In addition, Nokia's device volumes for the third quarter 2009 were somewhat constrained by component shortages across the portfolio, which are expected to continue to some degree in the fourth quarter 2009.

Of the total industry mobile device volumes, converged mobile device industry volumes in the third quarter 2009 were 47.0 million units, based on Nokia's preliminary estimate, compared with an estimated 44.2 million units in the third quarter 2008 and 41.0 million units in the second quarter 2009. Our own converged mobile device volumes were 16.4 million units in the third quarter 2009, compared with 15.5 million units in the third quarter 2008 and 16.9 million units in the second quarter 2009. Nokia's share of the converged mobile device market was an estimated 35% in the third quarter 2009, at the same level as in the third quarter 2008 and down from 41% in the second quarter 2009. We shipped 4.5 million Nokia Nseries and 4.4 million Nokia Eseries devices during the third quarter 2009, down from the combined 9.3 million Nseries and Eseries devices we shipped in the second quarter 2009.

The following chart sets out our mobile device volumes for the periods indicated, as well as the year on year and sequential growth rates, by geographic area.

Based on our preliminary market estimate, Nokia's mobile device market share for the third quarter 2009 was 38%, compared with 38% in the third quarter 2008 and in the second quarter 2009. Our year on year market share was higher in Europe, Latin America and Middle East & Africa. This was offset by lower market share in Greater China, Asia-Pacific and North America. Sequentially, our market share declined in Greater China, Asia-Pacific, Middle East & Africa and North America, but was offset by our increased market share in Europe and Latin America.

Our mobile device average selling price (ASP) in the third quarter 2009 was EUR 62, down from EUR 72 in the third quarter 2008 and at the same level as in the second quarter 2009. The year on year decline was primarily due to a higher proportion of sales of lower priced products as well as general price pressure. Sequentially, our ASP benefited from new product shipments, offset however by general price pressure.

Third quarter 2009 Devices & Services net sales declined 20% to EUR 6.9 billion, compared with EUR 8.6 billion in the third quarter 2008. Devices & Services net sales were down year on year in all geographic areas. At constant currency, Devices & Services net sales would have decreased 20%. The net sales decline resulted primarily from lower volumes, combined with the ASP decline, compared with the third quarter 2008. Of our total Devices & Services net sales, services contributed EUR 148 million in the third quarter 2009, representing 29% year on year growth and a 6% sequential growth. Nokia completed the divestment of its security appliances business in April 2009 and accordingly services net sales for the third and second quarter 2009 as well as for the prior periods are not directly comparable.

Beginning with the third quarter 2009, we are providing additional sequential comparative information for our Devices & Services business to reflect our product and solutions mode of operation and performance. We are now providing total net sales for Devices & Services divided into (i) net sales from smartphones and mobile computer solutions; that is, net sales of converged mobile devices, including the services and accessories sold with them, and (ii) net sales from mobile phones and embedded services; that is, net sales of Series 30 and Series 40-powered devices, including the services and accessories sold with them. We are also providing ASPs for each of these two categories of sales. Net sales from smartphones and mobile computer solutions totaled EUR 3.1 billion in the third quarter 2009, at the same level as in the second quarter 2009. The ASP for smartphones and mobile computer solutions was EUR 190, up from EUR 182 in the second quarter 2009. Net sales from mobile phones and embedded services totaled EUR 3.8 billion in the third quarter 2009, compared with EUR 3.5 billion in the second quarter 2009. The ASP for mobile phones and embedded services was EUR 41, at the same level as in the second quarter 2009.

Devices & Services reported gross profit and non-IFRS gross profit decreased 32% to EUR 2.1 billion, compared with EUR 3.1 billion in the third quarter 2008, with a reported and non-IFRS gross margin of 30.9% (36.5%). The year on year gross margin decrease was primarily due to higher cost of sales driven by a stronger Japanese Yen, as well as general price pressure.

During the third quarter 2009, Devices & Services reported operating profit decreased 51% to EUR 785 million, compared with EUR 1.6 billion in the third quarter 2008, with a reported operating margin of 11.4% (18.6%). Devices & Services non-IFRS operating profit decreased 51% to EUR 787 million, compared with EUR 1.6 billion in the third quarter 2008, with a non-IFRS operating margin of 11.4% (18.6%). The year on year decrease in non-IFRS operating profit for the third quarter 2009 was due primarily to lower net sales and higher cost of sales compared with the third quarter 2008. These factors were somewhat mitigated by a reduction in our operating expenses, compared to the third quarter 2008.

NAVTEQ

(Nokia completed the acquisition of NAVTEQ Corporation on July 10, 2008. Accordingly, NAVTEQ's results for the third quarter 2008 are not directly comparable to those for the third quarter 2009.)

Third quarter 2009 NAVTEQ net sales increased 6% to EUR 166 million, compared with EUR 156 million in the third quarter 2008. NAVTEQ reported gross profit was EUR 146 million (EUR 138 million), with a reported gross margin of 88.0% (88.5%). Non-IFRS gross profit was EUR 146 million (EUR 139 million), with a non-IFRS gross margin of 88.0% (88.5%). NAVTEQ had a reported operating loss of EUR 68 million (EUR 80 million loss). The reported operating margin was -41.0% (-51.3%). NAVTEQ non-IFRS operating profit was EUR 43 million (EUR 29 million), with a non-IFRS operating margin of 25.9% (18.5%).

When Nokia assessed goodwill for impairment on its annual impairment testing date in the fourth quarter 2008, Nokia concluded that a reasonably possible change of 1% in the valuation assumptions for long-term growth rate and pre-tax discount rate would give rise to an impairment loss for NAVTEQ. Nokia conducted a review and update of the assumptions used in the 2008 annual impairment testing analysis and performed a sensitivity analysis on these assumptions to assess the recoverability of NAVTEQ. This assessment resulted in no indication of impairment for NAVTEQ. However, Nokia has once again concluded that a reasonably possible change of 1% in the valuation assumptions for long-term growth rate and pre-tax discount rate would give rise to an impairment loss for NAVTEQ. Nokia continues to evaluate the financial performance and future strategies of NAVTEQ as well as market and economic conditions to assess the recoverability of NAVTEQ's carrying amount. Nokia will conduct its annual goodwill impairment testing in the fourth quarter 2009.

Nokia Siemens Networks

Third quarter 2009 net sales decreased 21% to EUR 2.8 billion, compared with EUR 3.5 billion in the third quarter 2008, reflecting challenging competitive factors and market conditions. At constant currency, Nokia Siemens Networks net sales would have decreased 20%. Of total Nokia Siemens Networks net sales, services contributed EUR 1.3 billion.

The following chart sets out Nokia Siemens Networks net sales for the periods indicated, as well as the year on year and sequential growth rates, by geographic area.

Nokia Siemens Networks reported gross profit decreased 28% to EUR 778 million, compared with EUR 1.1 billion in the third quarter 2008, with a reported gross margin of 28.2% (30.8%). Nokia Siemens Networks non-IFRS gross profit decreased 27% to EUR 794 million, compared with EUR 1.1 billion in the third quarter 2008, with a non-IFRS gross margin of 28.8% (31.2%). The lower year on year non-IFRS gross profit in the third quarter 2009 was due primarily to lower year on year net sales.

Nokia Siemens Networks had a third quarter 2009 reported operating loss of EUR 1 107 million, compared with an operating loss of EUR 1 million in the third quarter 2008, with an operating margin of -40.1% (0.0%). The operating loss in the third quarter 2009 was primarily driven by the EUR 908 million impairment of goodwill. Nokia Siemens Networks non-IFRS operating loss was EUR 53 million in the third quarter 2009, compared with a non-IFRS operating profit of EUR 177 million in the third quarter 2008, with a non-IFRS operating margin of -1.9% (5.1%). The year on year decline in Nokia Siemens Networks non-IFRS operating profit primarily reflected lower net sales.

Nokia recorded a charge to operating profit in the third quarter 2009 of EUR 908 million for the impairment of goodwill in Nokia Siemens Networks. After the impairment charge Nokia no longer carries any goodwill with regard to Nokia Siemens Networks. An additional charge of EUR 432 million was recorded to tax expense to provide a valuation allowance on Nokia Siemens Networks' deferred tax assets. The net impact of the asset impairment charges after minority interest totaled EUR 1 072 million, negatively impacting reported EPS by EUR 0.29.

The recoverability of the investment in Nokia Siemens Networks has declined as a result of the decline in forecasted profits and cash flows. The asset impairment charges are the result of an evaluation of the historical and projected financial performance of Nokia Siemens Networks, taking into consideration the challenging competitive factors and market conditions in the infrastructure and related services business, which have resulted in lower net sales projections and which, in turn, have reduced the projected scale and thus negatively impacted projected margins and profitability.

The recognition of a valuation allowance does not impact the validity of the deferred tax assets and Nokia Siemens Networks retains the possibility of recovering these assets if sufficient future taxable profits become available.

Networks, in collaboration with IBM, implemented a Service Delivery Framework for the operator, which offers an agile and efficient service creation environment, and reduces the time to market for new services.

For more information on the operating highlights mentioned above, please refer to related press announcements at the following links: http://www.nokia.com/press, http://www.navteq.com/about/press.html, http://www.nokiasiemensnetworks.com/press

NOKIA IN THE THIRD QUARTER 2009

(The following discussion is of Nokia's reported results. Comparisons are given to the third quarter 2008 results, unless otherwise indicated.)

Nokia's net sales decreased 20% to EUR 9 810 million (EUR 12 237 million). Net sales of Devices & Services decreased 20% to EUR 6 915 million (EUR 8 605 million). Net sales of NAVTEQ increased 6% to EUR 166 million (EUR 156 million). Net sales of Nokia Siemens Networks decreased 21% to EUR 2 760 million (EUR 3 503 million).

Operating loss was EUR 426 million (compared with an operating profit of EUR 1 469 million), representing an operating margin of -4.3% (12.0%). Operating profit in Devices & Services decreased 51% to EUR 785 million (EUR 1 602 million), representing an operating margin of 11.4% (18.6%). Operating loss in NAVTEQ was EUR 68 million (loss of EUR 80 million), representing an operating margin of -41.0% (-51.3%). Operating loss in Nokia Siemens Networks was EUR 1 107 million (loss of EUR 1 million), representing an operating margin of -40.1% (0.0%). The operating loss in Nokia Siemens Networks included a non-deductible impairment of goodwill charge of EUR 908 million. Corporate Common Functions reported expense totaled EUR 36 million (EUR 52 million).

In the third quarter 2009, net financial expense was EUR 48 million (net financial expense EUR 57 million). Loss before tax was EUR 469 million (profit of EUR 1 410 million). The results after taxes included a charge of EUR 432 million recorded to provide a valuation allowance on Nokia Siemens Networks' deferred tax assets. Loss was EUR 913 million (profit of EUR 1 055 million), based on a loss of EUR 559 million (profit of EUR 1 087 million) attributable to equity holders of the parent and a negative EUR 354 million (negative EUR 32 million) attributable to minority interests. Earnings per share decreased to EUR -0.15 (basic) and EUR -0.15 (diluted), compared with EUR 0.29 (basic) and EUR 0.29 (diluted) in the third quarter of 2008.

NOKIA IN JANUARY - SEPTEMBER 2009

(The following discussion is of Nokia's reported results. Comparisons are given to the January-September 2008 results, unless otherwise indicated.)

Nokia's net sales decreased 24% to EUR 28 996 million (EUR 38 048 million). Net sales of Devices & Services decreased 27% to EUR 19 674 million (EUR 26 958 million). Net sales of NAVTEQ were EUR 445 million. Net sales of Nokia Siemens Networks decreased 18% to EUR 8 949 million (EUR 10 971 million).

Operating profit decreased 99% to EUR 56 million (EUR 4 474 million), representing an operating margin of 0.2% (11.8%). Operating profit in Devices & Services decreased 59% to EUR 2 095 million (EUR 5 050 million), representing an operating margin of 10.6% (18.7%). Operating loss in NAVTEQ was EUR 288 million, representing an operating margin of -64.7%. Operating loss in Nokia Siemens Networks was EUR 1 656 million (loss of EUR 122 million), representing an operating margin of -18.5% (-1.1%). The operating loss in Nokia Siemens Networks included a non-deductible impairment of goodwill charge of EUR 908 million. Corporate Common Functions reported expense totaled EUR 95 million (EUR 374 million).

In the period from January to September 2009, net financial expense was EUR 186 million (net financial income EUR 14 million). Loss before tax was EUR 101 million (profit of EUR 4 494 million). The results after taxes included a charge of EUR 432 million recorded to provide a valuation allowance on Nokia Siemens Networks' deferred tax assets. Loss was EUR 622 million (profit of EUR 3 338 million), based on a loss of EUR 57 million (profit of EUR 3 412 million) attributable to equity holders of the parent and a negative EUR 565 million (negative EUR 74 million) attributable to minority interests. Earnings per share decreased to EUR -0.02 (basic) and EUR -0.02 (diluted), compared with EUR 0.91 (basic) and EUR 0.90 (diluted) in January-September 2008.

PERSONNEL

The average number of employees during January-September 2009 was 123 139, of which the average number of employees at Nokia Siemens Networks was 61 575. At September 30, 2009, Nokia employed a total of 123 347 people (123 006 September 30, 2008), of which 63 943 were employed by Nokia Siemens Networks (60 183 people at September 30, 2008).

SHARES

The total number of Nokia shares at September 30, 2009 was 3 744 956 052. At September 30, 2009, Nokia and its subsidiary companies owned 37 380 257 Nokia shares, representing approximately 1.0% of the total number of Nokia shares and the total voting rights.

1 EUR = 1.459 USD

The unaudited, consolidated interim financial statements of Nokia have been prepared in accordance with the International Financial Reporting Standards ("IFRS"). The same accounting policies and methods of computation are followed in the interim financial statements as were followed in the consolidated financial statements of Nokia for 2008.

The complete press release with tables is available at: http://www.nokia.com/results/Nokia_results2009Q3e.pdf

FORWARD-LOOKING STATEMENTS

It should be noted that certain statements herein which are not historical facts, including, without limitation, those regarding: A) the timing of product, services and solution deliveries; B) our ability to develop, implement and commercialize new products, services, solutions and technologies; C) our ability to develop and grow our consumer Internet services business; D) expectations regarding market developments and structural changes; E) expectations regarding our mobile device volumes, market share, prices and margins; F) expectations and targets for our results of operations; G) the outcome of pending and threatened litigation; H) expectations regarding the successful completion of contemplated acquisitions on a timely basis and our ability to achieve the set targets upon the completion of such acquisitions; and I) statements preceded by "believe," "expect," "anticipate," "foresee," "target," "estimate," "designed," "plans," "will" or similar expressions are forward-looking statements. These statements are based on management's best assumptions and beliefs in light of the information currently available to it. Because they involve risks and uncertainties, actual results may differ materially from the results that we currently expect. Factors that could cause these differences include, but are not limited to: 1) the deteriorating global economic conditions and related financial crisis and their impact on us, our customers and end-users of our products, services and solutions, our suppliers and collaborative partners; 2) the development of the mobile and fixed communications industry, as well as the growth and profitability of the new market segments that we target and our ability to successfully develop or acquire and market products, services and solutions in those segments; 3) the intensity of competition in the mobile and fixed communications industry and our ability to maintain or improve our market position or respond successfully to changes in the competitive landscape; 4) competitiveness of our product, services and solutions portfolio; 5) our ability to successfully manage costs; 6) exchange rate fluctuations, including, in particular, fluctuations between the euro, which is our reporting currency, and the US dollar, the Japanese yen, the Chinese yuan and the UK pound sterling, as well as certain other currencies; 7) the success, financial condition and performance of our suppliers, collaboration partners and customers; 8) our ability to source sufficient amounts of fully functional components, sub-assemblies, software and content without interruption and at acceptable prices; 9) the impact of changes in technology and our ability to develop or otherwise acquire and timely and successfully commercialize complex technologies as required by the market; 10) the occurrence of any actual or even alleged defects or other quality, safety or security issues in our products, services and solutions; 11) the impact of changes in government policies, trade policies, laws or regulations or political turmoil in countries where we do business; 12) our success in collaboration arrangements with others relating to development of technologies or new products, services and solutions; 13) our ability to manage efficiently our manufacturing and logistics, as well as to ensure the quality, safety, security and timely delivery of our products, services and solutions; 14) inventory management risks resulting from shifts in market demand; 15) our ability to protect the complex technologies, which we or others develop or that we license, from claims that we have infringed third parties' intellectual property rights, as well as our unrestricted use on commercially acceptable terms of certain technologies in our products, services and solutions; 16) our ability to protect numerous Nokia, NAVTEQ and Nokia Siemens Networks patented, standardized or proprietary technologies from third-party infringement or actions to invalidate the intellectual property rights of these technologies; 17) any disruption to information technology systems and networks that our operations rely on; 18) developments under large, multi-year contracts or in relation to major customers; 19) the management of our customer financing exposure; 20) our ability to retain, motivate, develop and recruit appropriately skilled employees; 21) whether, as a result of investigations into alleged violations of law by some former employees of Siemens AG ("Siemens"), government authorities or others take further actions against Siemens and/or its employees that may involve and affect the carrier-related assets and employees transferred by Siemens to Nokia Siemens Networks, or there may be undetected additional violations that may have occurred prior to the transfer, or violations that may have occurred after the transfer, of such assets and employees that could result in additional actions by government authorities; 22) any impairment of Nokia Siemens Networks customer relationships resulting from the ongoing government investigations involving the Siemens carrier-related operations transferred to Nokia Siemens Networks; 23) unfavorable outcome of litigations; 24) allegations of possible health risks from electromagnetic fields generated by base stations and mobile devices and lawsuits related to them, regardless of merit; as well as the risk factors specified on pages 11-28 of Nokia's annual report on Form 20-F for the year ended December 31, 2008 under Item 3D. "Risk Factors." Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements. Nokia does not undertake any obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required.

SOURCE Nokia Corporation