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Nokia posts drop in earnings, sales

Nokia  reported a 20 percent drop in third-quarter profits on Thursday, citing disappointing mobile phone sales that will likely put a damper on fourth-quarter results as well.
/ Source: The Associated Press

Nokia reported a 20 percent drop in third-quarter profits on Thursday, citing disappointing mobile phone sales that will likely put a damper on fourth-quarter results as well.

The world's largest handset maker said its third-quarter net profit dropped to 660 million euros($809 million), or 14 euro cents (17 cents) a share, from 823 million euros, or 17 euro cents a share, in 2003. Though the figure was down year on year, it was still greater than the range of 11 euro cents to 13 euro cents per share Nokia forecast in September.

Sales for the quarter that ended Sept. 30 were 6.94 billion euros ($8.5 billion), compared to 6.87 billion euros in the same period last year.

Nokia stunned industry watchers in April when it reported a drop in market share, admitting it was lagging behind in designing new, desired models, including the ubiquitous clamshell models.

Having taken a beating for most of the summer, Nokia in September revised its third quarter outlook, calling for improved profits. The third-quarter results reported Thursday exceeded the company's forecasts, but failed to excite Wall Street.

Mobile phone sales dropped 13 percent to 4.4 billion euros ($5.4 billion) from a year ago, although the company claimed its share of the global handset market grew to almost 33 percent, up from 31 percent in the second quarter of this year.

Also Thursday, the Finnish company gave a gloomy outlook for the rest of the year, predicting fourth-quarter sales would be between 8.4 billion euros ($10 billion) and 8.6 billion euros($10.5 billion), down from 8.8 billion euros the same period last year. Earnings per share would, at most, be 18 euro cents (22 cents) compared to 25 euro cents in the last quarter of 2003, Nokia said.

The result was mostly in line with expectations, and Nokia's share price remained unchanged at 11.42 euros ($14) on the Helsinki Stock Exchange for several hours in afternoon trading.

Jussi Hyoty, chief analyst at FIM Securities in Helsinki, said the result was as expected.

"This was exactly as we had anticipated, although maybe markets abroad thought the result would be worse," Hyoty said.

Although mobile phone sales fell, Nokia saw 21 percent growth in its ailing networks sector and a 94 percent growth in multimedia, to 914 million euros ($1.1 billion).

Also, the enterprise solutions unit, aimed at corporate clients, grew by 52 percent in the three months compared to the same period in 2003.

But competition in mobile markets remains tight.

The company is struggling to regain ground lost to U.S.-based Motorola Inc. and South Korea's Samsung Corp., which have unveiled sharp models coveted by buyers.

Chief executive Jorma Ollila said Nokia sold 51 million handsets in the period, but conceded that "industrywide component tightness affected our overall volumes."

He said Nokia lost share in its biggest market, the United States, but made "substantial gains" in Western Europe.

For the year to date, Nokia reported a profit of 2.19 billion euros ($2.6 billion), or 47 euro cents (5 cents) a share, compared with 2.42 billion euros, or 51 euro cents.

Sales for the first nine months were at 20.2 billion euros ($25 billion), down slightly from 20.67 billion euros.

Nokia, based in Espoo, just outside the Finnish capital, has sales in 130 countries with 53,000 employees.