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Nokia posts first quarterly loss this decade
2009-10-15
HELSINKI (AFP) - Finnish mobile phone giant Nokia reported a third quarter net loss Thursday of 559 million euros (834 million dollars), its first shortfall this decade, citing falling sales and a large impairment cost. The surprising loss drove Nokia shares down 9.32 percent to 9.34 euros on the Helsinki stock exchange, which was down 1.14 percent overall. "At first the results looked pretty good but a close look revealed that some important things are in bad shape," FIM Bank analyst Michael Schroeder told AFP. He said the fall in profitability at the mobile phone division and the decrease in the smart phone market share were worse than expected. Nokia estimated its market share of the global smart phone segment fell to 35 percent from 41 percent in the second quarter. The company's results were also weighed down by a 908-million-euro impairment charge for goodwill in telecom equipment maker Nokia Siemens Networks, a joint venture with Germany's Siemens. There was a third quarter operating loss of 426 million euros, compared with a profit of 1.5 billion euros in the same period in 2008. Sales in the July-September period fell nearly 20 percent to 9.8 billion euros, while the average selling price of a Nokia device remained at 62 euros. "Our volumes and net sales were, however, somewhat constrained by component shortages we encountered across the portfolio," chief executive Olli-Pekka Kallasvuo said in a statement. For the past year, the world's biggest mobile device maker has been suffering from the global financial turmoil that has made many consumers trade down to cheaper phones. At the same time, competition in smart phones has become tougher as many consumers opt for Apple's iPhone or RIM's Blackberry over a Nokia device. Kallasvuo said "the demand for mobile devices improved in many markets during the third quarter." Nokia said it expected more mobile phones to be sold in the last quarter of the year than in the previous three months. It hiked its forecast for global mobile phone sales, saying these would fall approximately seven percent in 2009 from 2008, compared to its previous prediction for a 10 percent fall. The company said it aims to improve the profitability of its mobile phone unit in the fourth quarter. Analyst Jari Honko from eQ Bank said that it was good sign that "the global mobile device volume forecast was clarified," adding that Nokia?s view was more positive than current market expectations.
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