Nokia's profit falls 66% as company cuts forecasts

Nokia's net profit fell 66% in the second quarter, but the Finnish company saw its market share increase to 38%, up from 37% 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 €378  million, down from Euro1.09 billion in the year-ago quarter. Sales dropped to Euro 9.9 billion, down from $13 billion in the second quarter last year, missing expectations of €10.10 billion.

The world's largest handset maker shipped 103.2 million units in the quarter, down 15% year-over-year, but up 11% 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 Euro 62.00, down from $65.00 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% to around $9.50 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 world’s 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.”

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- see this release
- see this WSJ article (sub. req.)
- see this Bloomberg News article