Nokia surprises as profit soars 65%

Michael Carroll & Nicole McCormick
29 Jan 2010


Nokia has surprised with a 65% hike in earnings as its new smartphones won market share against Apple and RIM.


It posted a Q4 profit of €948 million ($1.3b), up from €576 million a year earlier, and ahead of analyst forecasts of €533 million.


Operating profit leapt from €492 million in Q408 to €1.1 billion in Q409.


The handset leader, which took a battering through much of last year from the recession and the popularity of the iPhone, grew its share of the smartphone market to 40%, up from 35% in the third quarter.


Its also expanded its piece of the mobile device market by two points to 39% from the previous year, based on shipments of 126.9 million units. Average selling price increased to €63 up from €62 in Q3.


Net sales at the key devices and services division of €8.2 billion in Q409 were up a marginal 0.5% compared with Q408, and grew 18.3% over Q309.


CEO Olli-Pekka Kallasvuo says stronger smartphone sales were a result of the launch of new devices sporting touchscreens and qwerty keyboards.


“The level of competition in the handset market, especially in the smartphone market, has increased dramatically since Q2,” said Julien Blin, Principal Analyst & CEO at US-based JBB Research.


“But, despite this, the fact that Nokia’s market share in the smartphone market grew…is quite impressive.


“Nokia, which is still dominates both the feature phone and smartphone market, is likely to sustain its leaderships for quite some time,” adds Blin.


Nokia predicts lower sales of €6.5-€7 billion for the devices and services unit in Q110 compared to Q409, due to seasonality.


Device shipments are forecast to grow 10% year-on-year through 2010, and Nokia will look to maintain its market share at around the 38% it reported for 2009.


Meanwhile, US rival Motorola reported quarterly earnings of $142 million on sales of $5.7 billion, short of analyst expectations of $5.9 billion. 


Earnings were largely driven by a cost-reduction program that generated more than $1.9 billion in savings for the firm in 2009, with $1.5 coming from the mobile devices unit.


The mobile devices arm reported an operating loss of $132 million in Q409, with sales of $1.8 billion, down 22% compared with Q408.


Motorola shipped a lower than expected 12 million handsets in Q409, including 2 million smartphones, which included its new Android-enabled Cliq and Droid smartphones.


The firm estimates its share of the global handset market at 3.7% at end-Q409.


"We performed well in the face of a challenging environment in 2009,” said Greg Brown, Motorola co-CEO.


“As market growth returns, we are well positioned to take advantage of our investments in key global markets with a competitive cost structure,” Brown said.


Co-CEO Sanjay Jha said the first Android devices had been well-received and the company expected to launch “at least 20 smartphone devices” in 2010.


Motorola’s outlook for the first quarter of 2010 is a loss of 1-3 cents per share, excluding unusual items. Analysts were expecting a profit of 3 cents per share.



Michael Carroll & Nicole McCormick

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