Nokia First Quarter 2010,revenue and profit higher than last year’s.
Fri, Apr 23, 2010
Nokia reported improved profits and revenue for the first quarter, but both numbers were below analysts’ expectations. The company also lowered its operating margin outlook for 2010.
Nokia’s first-quarter profit came in at €349 million (US$465 million), up from €122 million a year ago, helped by cost cuts and increased smartphone sales. Revenue grew by 3 percent and totaled €9.5 billion.
The company continues to face tough competition in the high-end sector of the mobile phone arena and challenging market conditions on the infrastructure side of the business, where it is represented by Nokia Siemens Networks, according to a statement.
Much has been made of Nokia’s deficiencies in the smartphone segment. The company sold 21.5 million smartphones in the first quarter 2010, an increase of 57 percent compared the same period in 2009 and 3 percent more than in the fourth quarter of 2009. That means Nokia’s market share now stands at 41 percent, a one point gain over the last quarter of 2009.
The growth mainly comes from lower priced smartphones. However, Nokia still doesn’t have a high-end smartphone that can compete with the likes of the iPhone and the Google Nexus One and its sibling, the HTC Desire.
That has an effect on Nokia’s average sales price per phone, which was down to €62 from €66 a year ago. The average sales price of its smartphones dropped from €190 to €155.
The company is planning a family of smartphones based on the Symbian 3 operating system, which will offer the improved user experience Nokia’s CEO Olli-Pekka Kallasvuo has been promising. The first device will be launched during the second quarter and shipped in the third quarter, according to Nokia. That’s later than originally planned, but the company is putting quality first, Kallasvuo said during a conference call.
In total, Nokia sold 107.8 million phones during the first quarter, which was up 16 percent year-on-year.
The Finnish phone manufacturer also commented on the repercussions of the ash cloud from the Icelandic volcano Eyjafjallajökull. Nokia said it has adjusted its logistics operation to help ensure the availability of products and components. However, it is too soon to gauge the overall impact of the eruption that disrupted air travel throughout Europe in recent days, according to Nokia. It may have an adverse impact on sales, but that depends on how long the alternative measures have to be in place, Nokia said.
Nokia expects sales of mobile devices will increase by 10 percent in 2010.
Olli-Pekka Kallasvuo, Nokia’s CEO commented: “In Q1, Nokia delivered both year-on-year net sales and operating profit growth. We continue to face tough competition with respect to the high end of our mobile device portfolio, as well as challenging market conditions on the infrastructure side.
During the quarter, we also demonstrated our ability to deliver the Nokia smartphone experience to consumers on a global scale, with our smartphone shipments up by more than 50% year-on-year. The consumer response to the inclusion of our walk and drive navigation offering on our smartphones has been tremendous. Since launching in January, 10 million Nokia smartphone users around the world have downloaded the offering.
In infrastructure, Nokia Siemens Networks’ profitability benefited from a positive sales mix in Q1. I am also pleased to see encouraging results from the company’s focus on helping operators meet the challenge of the rapid growth in data and signaling traffic from smartphones.”
Nokia’s first quarter 2010 reported operating profit increased to EUR 488 million, compared with EUR 55 million in the first quarter 2009. Nokia’s first quarter 2010 non-IFRS operating profit increased 60% to EUR 820 million, compared with EUR 514 million in the first quarter 2009. Nokia’s first quarter 2010 reported operating margin was 5.1% (0.6%). Nokia’s first quarter 2010 non-IFRS operating margin was 8.6% (5.5%).
Operating cash flow for the first quarter 2010 was EUR 1.0 billion. The operating cash flow for the first quarter 2009 was EUR 0.3 billion. Total cash and other liquid assets were EUR 9.7 billion at end of the first quarter 2010, compared with EUR 8.1 billion at the end of the first quarter 2009. At the end of the first quarter 2010, Nokia’s net debt-equity ratio (gearing) was -31%, compared with -14% at the end of the first quarter 2009.
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