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Jul. 17, 2009

Late yesterday, Nokia said its profit fell about 66.2 percent in its second quarter, as the current global recession continued to slow down sales and squeeze profit margins.

Nokia's profit actually fell to €380 million, or 10 European cents per share, from €1.10 billion, or 29 cents per share for the comparable 2008 period.

Sales dropped to €9.91 billion from €13.15 for the same 2008 period. But nevertheless, Nokia still beat analysts' earnings estimates by about one cent per share and managed to increase its global market share from last quarter.

Its portion of the global handset market now stands at 38 percent, and the company managed to expand its smartphone market share to an estimated 41 percent.

Olli Kallasvuo, Nokia's CEO said "overall, global competition still remains very intense, but demand in the mobile device market appears to be bottoming out."

Nokia, the world’s largest mobile device maker, is showing signs of strain. The average selling price of a handset dropped to €62 from €65, and the company said it expected that figure to continue to drop.

It also forecast that its market share in the mobile device market would remain flat this year compared to last year. The company had previously predicted it would increase its market share this year.

Nokia maintained its previous demand estimate, which predicted a 10 percent drop in industry volumes for 2009.

Julien Blin, analyst at JBB Research said “Nokia appears to moving in the right direction, focusing on mobile app/services and the highly competitive low-end touchscreen smartphone market. In the coming years, Nokia is well positioned to sustain its leadership in the handset market and become a key player in the mobile applications/services space.”

Blin added “in the coming quarters, Nokia is likely to continue to face increased competition, especially from LG, Samsung, Palm, RIM, Apple and HTC."

He expects this year to continue to be a rough one for the company, but expects demand to pick up next year and for most of 2011.

It will be interesting to see what the earnings and sales of other wireless device makers will be when they all start reporting their numbers in the next few weeks.

As always, Wireless Industry News will keep you posted on the latest developments as they happen.

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    This article was featured on Business 5.0 and on Tech Blog.

Source: Nokia.