Nokia's outlook for 2008 is good, market share is up

Nokia surprised analysts this morning with better-than-expected second-quarter earnings. Although the company's profit was down ($1.75 billion compared to $4.49 billion a year earlier) most of that difference was because the 2007 results included a $2.98 billion gain from the formation of Nokia Siemens Networks. On the good news front, Nokia said that its global market share for handsets is at 40 percent, up from 38 percent a year ago. In addition, the company upgraded its forecast for the global handset market saying that mobile device volumes could grow more than its previous estimate of 10 percent in 2008.

On the negative side, Nokia's handset average selling price continues to drop because of higher volumes of cheaper phones being sold in emerging markets and the impact of the weak dollar. Nokia's ASP was $117, down from $125 in the first quarter and down from $143 in the same quarter a year ago. The company also said it had lost some share of the smartphone market in the second quarter, but said it was due to a lack of smartphones in its portfolio. Nokia executives said that will improve in the second half of the year because the company plans to introduce 10 new smartphones.

In the U.S. market, where Nokia has been weak, the firm saw some improvement thanks to two handsets, one that is offered by T-Mobile USA and another by AT&T. Nokia executives expect this to improve even more as the company has had its first CDMA handset approved by Verizon Wireless for use on its network.

Nokia Siemens Networks meanwhile continues to focus on lowering expenses and improving margins. Nokia executives said that the market is difficult because of competition but that management is focusing on being profitable rather than attaining market share. The joint venture finished a quarter with surprisingly strong revenue growth of 18 percent to $6.45 billion over the second quarter of 2007, which was the first reporting quarter for the company. 

For more:
- see this press release [1]

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