Thursday, January 25, 2007

Nokia Net Profits Up 19 Percent in 4Q

World-leading mobile phone maker Nokia Corp. said Thursday that its net profit rose 19 percent on growing sales in the fourth quarter, beating market expectations.

Net profit came to 1.27 billion euros ($1.65 billion), up from 1.07 billion euros in the fourth quarter of 2005. Quarterly sales rose 13 percent to 11.7 billion euros ($15.22 billion), from 10.33 billion euros in the same period a year earlier.

Analysts polled by SME Direkt had forecast a net profit of 1.11 billion euros ($1.44 billion) and sales of 11.58 billion euros ($15.06 billion).

Meanwhile, the closely watched average selling price of Nokia phones dropped to 89 euros ($116), from 93 euros in the previous quarter and 99 euros in the fourth quarter of 2005. That figure has dropped consistently, reflecting a higher proportion of low-end phones in emerging markets such as India and China.

Shares in Nokia gained 4 percent to 16.22 euros ($21.09) on the Helsinki exchange after the announcements.

"Nokia was able to increase its share of the global device market significantly in 2006 to an estimated 36 percent, clearly solidifying our No. 1 position in the industry," Chief Executive Olli-Pekka Kallasvuo said.

"We achieved this result through the strengths of Nokia's world class brand, products, cost structure and efficiency, without sacrificing our operating margins or cash flow."

The Finnish company said it expects the global market for mobile phones to grow 10 percent in 2007 to 978 million handsets. It said its target is to continue raising its market share.

Nokia was the last of the world's top mobile phone makers to release fourth-quarter earnings.

Last week, the company's main rival, Motorola Inc., said it saw profits drop 48 percent in the last three months of 2006 and announced it would cut 5 percent of its work force to improve operating costs.

The industry's No. 3 player, Samsung Electronics Co., said profit fell 8 percent, citing price declines for other key products such as flash memory chips and liquid crystal displays. But it said it sold 32 million mobile phones during the quarter, a company record.

Meanwhile, the fast-growing Sony Ericsson said its net profit more than tripled in the quarter, beating expectations as record sales of its music and camera handsets helped it gain market shares.