Nokia reports lower net profit in third quarter

HELSINKI: Finnish-based Nokia, the world's biggest mobile phone maker, said Thursday its operating profit dropped by 21 per cent in the third quarter of 2008. Operating profit for the quarter was 1.46 billion euros ($1.98 billion), compared to 1.86 billion euros for the corresponding business period in 2007. Net sales dropped 5 percent in the quarter to 12.2 billion euros.

Chief Executive Olli-Pekka Kallasvuo said in a statement he believed Nokia was "well positioned for the current times", citing the group's "scale, brand, improving product portfolio and low cost structure". Nokia estimated that its share of the global handset market in third quarter of 2008 was 38 per cent, compared with 39 per cent in the third quarter of 2007 and 40 per cent in the second quarter 2008.

In its outlook, Nokia said it expected the global mobile handset market to increase in the fourth quarter, while Nokia's share of the global market would be steady or slightly up. The total global handset market for 2008 was estimated at some 1.26 billion units.

Nokia's third quarter sales of mobile phones increased by 5 per cent year-on-year to 117 million units, but dropped 3 per cent compared to second quarter 2008. The group said it sold 27.4 million units in Europe, 33.6 million units in Asia-Pacific, 19.8 million units in China and 21.5 million units in the Middle East and Africa.

Sales in Latin America were down 28 per cent to 15.3 million units compared to second quarter 2008, but were flat in North America. The overall drop in sales of handsets between second and third quarter 2008 was due to a "tactical decision" not to slash prices as some rivals had, as well as "overall market competition", Nokia said.

Other trends included lower average selling prices for its handsets. Nokia said the average selling price of its mobile devices in the third quarter of 2008 was 72 euros, down from 74 euros in the second quarter 2008, and 82 euros in third-quarter 2007.

Net sales for the 50-50 joint venture Nokia Siemens Networks - launched last year between Nokia and Germany's Siemens - dropped 5 percent to 3.5 billion euros year-on-year. The operating loss was 1 million euros, compared to a loss of 120 million euros in the third quarter 2007.