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Nokia Profits Drop 40 Percent Year-Over-Year

By Andrew Berg | July 22, 2010

As rumors swirl about an impending leadership change at Nokia, the Finnish OEM today reported a 40 percent dip in profits year-over-year for the second quarter. Nokia’s total mobile device volumes were up 8 percent year-over-year to 111.1 million units.

Nokia CEO Olli-Pekka Kallasvuo said in a statement that the company was encouraged by the second quarter performance of the mobile phone business, which was helped by an “improving line-up of affordable models.”

Still, that’s probably not what investors wanted to hear, as pressure is on Kallasvuo to produce a competitive high-end smartphone that can keep the company’s margins up.

While net profits were $284 million, year-over-year net profits were down from $488 million. Overall operating margins were down to 2.9 percent from 5.1 percent sequentially and 4.3 percent in the year-ago quarter.

The company once again renewed its commitment to the open-sourced Symbian operating system.

“We believe that the Nokia N8, the first of our Symbian^3 devices, will have a user experience superior to that of any smartphone Nokia has created. The Nokia N8 will be followed soon thereafter by further Symbian^3 smartphones that we are confident will give the platform broader appeal and reach, and kick-start Nokia’s fightback at the higher end of the market,” Kallasvuo said in the statement.

Technology Business Research senior analyst Ken Hyers said Nokia’s results demonstrate a failure to innovate. Even though it will finally begin shipping its first new Symbian 3 device late in the third quarter, the new OS and devices will not be enough to turn things around, he said. And despite repeated assurances that North American growth would be a priority, it has never been able to make inroads in the region, where Motorola, Samsung and LG dominate overall handset sales and Apple, Research In Motion (RIM) and Android lead in smartphone sales, Hyers said.

The company published guidance that projects devices and services net sales to be between $8.6 billion and $9.2 billion in the third quarter 2010. Additionally, the company said it expects its mobile device value market share to be slightly lower in 2010 compared to 2009.

In early morning trading, Nokia’s stock was up almost 5 percent, to $9.20 from yesterday’s close of $8.82.


Filed Under: Devices

 

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