Nokia profit drops 66 percent in 2Q

[July 16, 2009]  STOCKHOLM (AP) -- The world's top cell phone maker, Nokia Corp., on Thursday said earnings fell 66 percent in the second quarter as the global recession sapped demand for handsets.

Net profit was euro380 million (US$535 million), down from euro1.1 billion in the same period a year earlier. Sales tumbled 25 percent to euro9.91 billion.

Analysts polled by SME Direkt had forecast a profit of euro327 million and sales of euro10.1 billion. Nokia shares fell 8.1 percent to euro10.20 in Helsinki after the report.

The Finnish company, which sells about four in 10 mobile devices worldwide, dropped its target to increase market share this year, saying it expects its share of the mobile market to remain unchanged from 2008.

Nokia CEO Olli-Pekka Kallasvuo said the company "put in a solid performance in what was another tough quarter."

Its global market share climbed to 38 percent in the second quarter, from 37 percent in the previous three months, but was still down from 40 percent a year earlier.

"We are balancing short-term priorities with our longer-term growth ambitions as elements of the mobile handset, PC, Internet and media industries converge to form a new industry," Kallasvuo said in a statement. "Consumers will increasingly expect devices and services designed as integrated solutions. To capture this opportunity we are accelerating our strategic transformation into a solutions company."

Mobile phone sales have dropped off sharply in the economic slump. Global shipments fell 13 percent to 245 million units in the first quarter, the sharpest annual decline since the mobile phone industry started in the 1980s, according to research firm Strategy Analytics.

Though market leader Nokia has weathered the crisis better than some smaller competitors, it has been forced to cut thousands of jobs because of falling demand and lower handset prices.

A household name in Asia and Europe, Nokia is a smaller player in the United States, where its smartphones face tough competition from Apple Inc. and Research in Motion Ltd., the makers of the iPhone and BlackBerry.

[Associated Press; By KARL RITTER]

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