Nokia figures buoyant as Motorola struggles

Nokia the Finnish mobile phone monolith has reported a huge leap in turnover and profits, helped by growing demand for smartphones.

The company reported net sales of â15.7 billion (ï11.7 billion) and â51.1 billion (ï38.1 billion) in its fourth quarter and full year respectively. Net profits were â1.835 billion (ï1.365 billion) for the quarter and â7.205 billion (ï5.36 billion) for the year, up 67 per cent on the previous full year.

"Nokia's excellent fourth quarter contributed to a year of high growth and increased profitability for the company, while our industry leading product portfolio drove our device business to an estimated 40 per cent market share in the fourth quarter. At the same time we again increased our quarterly device margins, allowing Nokia to continue to invest for innovation and growth," said Olli-Pekka Kallasvuo, Nokia's chief executive in a statement accompanying the results announcement.

"It was a year of important strategic initiatives by Nokia, with Nokia Siemens Networks starting operations, our internet services effort taking shape around Ovi, and the announcement of the pending acquisition of NAVTEQ. Facing a market that remains intensely competitive, we are continuing to improve our leading device portfolio as well as execution at Nokia Siemens Networks. With this we believe Nokia is well positioned for growth in 2008."

Nokia's positive performance and outlook isn't shared by all of its major competitors. Motorola reported a 38 per cent slump - to $4.8 billion (ï2.4 billion) - in mobile device sales compared with the same period a year ago.

Motorola shipped 40.9 million handsets during its fourth quarter but racked up quarterly operating losses of $388 million (ï196 million) for its mobile devices division compared with operating earnings of $341 million (ï173 million) for the same quarter in 2006. Full year 2007 mobile device sales were $19 billion (ï9.6 billion), down by a third from 2006 and the division lost $1.2 billion (ï600 million), compared to operating profit of $2.7 billion (ï1.35 billion) in 2006.

"We are focused on aggressively rationalising the company's cost structure and working to get mobile devices back on track," said Greg Brown, Motorola's chief executive. "The recovery in mobile devices will take longer than expected and there is a lot more work to be done. Our primary focus is on improving profitability and enhancing our product portfolio in this business. At the same time, we are very pleased with the continued strong performance of our home and networks mobility and enterprise mobility businesses."

Overall sales at Motorola for the quarter were $9.6 billion (ï4.8 billion) and $36.6 billion (ï18.5 billion) for the full year compared to 2006 figures of $11.7 billion (ï5.9 billion) and $42.8 billion (ï21.7 billion) respectively. Overall the company lost $49 million (ï24.5 million) compared to a profit of $3,661 billion (ï1.83 billion) the previous year.

"Motorola has quietly changed tack. Rather than talking up refreshes of existing products, the company is now clear that it is working on new software and hardware platforms and that these will enable a whole new portfolio," said Martin Garner, mobile director at analyst Ovum. "A key part of this is a new deal for 3G chipsets, announced yesterday. The first products from this approach will ship in 2008, but the portfolio will only be robust in 2009. Given Motorola's heavy dependence on the US market and the likelihood of recession there, this leaves 2008 looking grim."

Garner concluded: "Given the length and depth of the handset problems, it's increasingly difficult to see why shareholders should see logic in keeping the divisions together. Are there really valuable synergies between the other divisions and a handset business that is in such difficulty? Or would it be better to break the company up?"

"There has been speculation about who might buy the handset division. We think that a sale is unlikely. But there might be interest in a Sony Ericsson style joint venture."

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