Nokia's profit falls 66% as company cuts forecasts

Nokia's net profit fell 66 percent in the second quarter, but the Finnish company saw its market share increase to 38 percent, up from 37 percent in the first quarter. "Competition remains intense, but demand in the overall mobile device market appears to be bottoming out," Nokia CEO Oli-Pekka Kallasvuo said in a statement. "As before, we are continuing to tightly manage our operating expenses."

Nokia's net profit for the quarter was $535 million, down from $1.55 billion in the year-ago quarter. Sales dropped to $14.01 billion, down from $18.59 billion in the second quarter last year, missing expectations of $14.29 billion. The world's largest handset maker shipped 103.2 million units in the quarter, down 15 percent year-over-year, but up 11 percent from the 93.2 million the company shipped in the first quarter of 2009. In addition, the average selling price for its devices fell to $87.68, down from $91.92 in the first quarter.

Despite the sluggish results, it appeared to be the company's lowered forecast that upset investors, who sent Nokia's stock down almost 15 percent to around $13.44 per share after the company's announcement. Nokia said its mobile devices market share for 2009 will be flat compared with 2008 (the company previously expected an increase), and said its mobile devices operating margins for the second half would be the same as the first half (Nokia had expected better).

"Nokia is still suffering from weak global sales," industry analyst Jeff Kagan said. "This is the worlds largest cell phone maker and they are suffering for two main reasons: One is the current state of the global economy, and two is Nokia sticking with plain mobile phones as the market is rapidly shifting to smartphones."

As for Nokia's network equipment joint venture, Nokia Siemens Networks, the company had sales of $4.52 billion, down 21 percent year-over-year and up 7 percent sequentially. Nokia said it expects the mobile infrastructure market overall to decline 10 percent this year, and now expects NSN's market share to decline moderately this year; it had previously thought the company's market share would be flat this year. 

For more:
- see this release [1]
- see this WSJ article [2] (sub. req.)
- see this Bloomberg News article [3]

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