Nokia oustrips forecasts with strong Q4 results
Finnish mobile giant Nokia has smashed analyst predictions by posting strong quarterly earnings and increasing its market share, and says more is to come.
Nokia has posted better-than-expected quarterly earnings, with profits up 64 per cent year-on-year.
For the three months to December, the mobile phone maker posted a net profit of 948 million (820 million), up from 551 million (476 million) a year ago and significantly outstripping forecasts of 620 million (536 million).
With analysts unanimous in their praise, Nokia's share price on the Helsinki stock exchange jumped nearly 10 per cent to a three-month high yesterday.
Despite the positive quarterly figures, however, for the full year Nokia's profits fell 78 per cent to 900 million (778 million) and sales fell 18 per cent to 41 billion (35 billion) thanks to the global economic downturn.
Nonetheless, analysts were ebullient in their praise: "This was a very, very strong report overall," Evli analyst Mikael Andersson commented. "The average selling price (of mobile phones) continued to stabilise and was actually up on the quarter."
Nokia also cemented its market share, particularly in the all-important smartphone sector, where it now holds 40 per cent of the market, up five per cent on the previous quarter. Of the overall phone market, Nokia's share is 39 per cent, an increase of two per cent.
"Our performance in smartphones, combined with continuing success in the emerging markets, helped us increase sales in our Devices and Services unit, both quarter-on-quarter and year-on-year," Nokia chief executive Olli-Pekka Kallasvuo said in a statement.
In total, Nokia sold 126.9 million handsets in the three months, leaving Kallasvuo optimistic for the future. "We have a good portfolio at this point in time ... and we need to have a great portfolio going forward," he said.
Along with a stronger hardware lineup Nokia's online app store is also performing well, and is now averaging more than one million downloads per day. That figure is likely to gain further momentum by downloads of Nokia's latest Ovi Maps navigation app, which now delivers free turn-by-turn directions.
Nokia posted its first quarterly loss in a decade in Q3 2009, due to a combination of the weak economy and the strength of its smartphone rivals, but a string of new product releases in the final three months of the year, including the N97 mini, the X6 and the N900, drove it back into the positive.
"The biggest surprise was that they managed to hike their market share in smartphones, which have been seen as Nokia's weakness," said Nordea analyst Martti Larjo.
Despite the positive results, Nokia has cut its research and development spending by nine per cent, its sales and marketing spend by 18 per cent and administrative expenses by 15 per cent in a further attempt to streamline its operations. Overall, 2009 saw 2,276 jobs cut, or about 1.8 per cent of Nokia's total workforce.
For the year ahead, Kallasvuo promised a string of new high-profile smartphones, and possibly a tablet computer to take on Apple's iPad.
"Apple continues to be a great competitor, no doubt about that," Kallasvuo said. "But we have our assets as well. Our strategy is in democratising the smartphone in a massive way."
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