Nokia profit slides 69 per cent

Nokia today reported that its profits dropped by 69 per cent in its last fiscal quarter of 2008, as the global economic slowdown hit its handset sales.

The biggest mobile manufacturer said handset sales in its fourth quarter of 2008 were down 19.5 per cent to €12.7 billion, while net profit was €576 million (£545 million), down from €1.84 billion (£1.7 billion) in the same period of 2007.

The results failed to meet analyst expectations, losing Nokia five per cent of the value of its shares immediately after this morning‘s announcement.

Analyst Carolina Milanesi, Gartner's mobile devices research director, said sale volumes were also lower than expected. “We predicted their sales to be flat quarter-on-quarter rather than down,” she said.

“I think this reflects not only the current economic climate but also the relative weakness that Nokia has in the high-end portfolio for markets such as Western Europe.”

Nokia also said the outlook for 2009 was not much better, predicting a decrease in global mobile device volumes of 10 per cent compared to last year.

As to its fourth fiscal quarter of 2008, Nokia continued to lose ground in terms of global handset market share. It's 40 per cent share in the fourth quarter of 2007 fell to 37 per cent today.

But Nokia added it expected to retain this market share during the fist quarter of 2009, and it plans to still try and increase its share overall in the coming year.

Nokia's chief executive Olli-Pekka Kallasvuo blamed weaker consumer confidence, unprecedented currency volatility and credit tightness for the results.

He added: "We are taking action to reduce overall costs and to preserve our strong capital structure. This is clearly our top priority in the current economic environment.”

Gartner’s Milanesi agreed that the company wasn’t in bad shape. “We continue to believe that Nokia is best placed to deal with the current market conditions thanks to its economies of scale, distribution channel and portfolio that meets different price points,” she said.

Milanesi added that Nokia's internet services called ‘OVI’ would make it stand out from competitors.

“They will be able to offer value added to their hardware in a way that some of their competitors will not,” she added, concluding that “their key focus for the year should be to improve usability on their devices so that consumers can truly take advantage of such services“.

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