Nokia profit dives, predicts weaker handset market

Nokia warned of a further weakening in the mobile phone market as it posted a 69% slump in quarterly profit Thursday.

Its fourth quarter earnings fell to $746.3 million on 19% lower sales of $16.45 billion.

The handset leader once more revised downward its 2009 outlook. It now expects a 10% decline in device sales industry-wide. Last month it predicted a 5% decline.

Handset shipments were down 15% year-on-year to 113.1 million. It shipped 468.4 million devices over the full year, up 7.2%, but said market share was 37%, down from 40% in 2007 and 38% in Q3.

"In recent weeks, the macroeconomic environment has deteriorated rapidly, with even weaker consumer confidence, unprecedented currency volatility and credit tightness continuing to impact the mobile communications industry," said Nokia CEO Olli-Pekka Kallasvuo.

But Kallasvuo said the company would "continue investing at the proper pace" for future growth.

Operating profit declined 37.8% for the full year to $6.43 billion. Group-wide sales decreased 1% to $65.6 billion.

The company expects its profit margins to decline slightly in the first half of the year, but is predicting it will maintain its current market share. 

Nokia Siemens Networks continues to run at a loss. It recorded sales of $5.57 billion - a 5% year-on-year decline, but a 24% increase over its Q3 results. It posted operating losses of $231.8 million for the quarter and $391 million for the year. It lost $1.7 billion in 2007.

Nokia's stock fell 8.5% to 9.38 euros ($12.15) following the announcement.

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