Nokia Q4 results reflect market conditions

Nokia today released its Q4 2008 results. Nokia net sales of EUR 12.7 billion, down 19% year on year and up 3% sequentially (down 18% and up 1% at constant currency). Nokia sold 15.1 million converged (S60) devices, down from 15.5 million in Q3 and 18.8 million in Q4 2007, of these 8 million were Nseries and 3 million were Eseries. Nokia's industry outlook for 2009 estimates mobile device volumes to decrease by 10%. The results are set against the background of the global economic slow down.

Olli-Pekka Kallasuvo, Nokia CEO, said:

"In recent weeks, the macroeconomic environment has deteriorated rapidly, with even weaker consumer confidence, unprecedented currency volatility and credit tightness continuing to impact the mobile communications industry. We are taking action to reduce overall costs and to preserve our strong capital structure. This is clearly our top priority in the current economic environment. However, it is important for Nokia to continue investing at the proper pace in future growth. We believe Nokia has a tremendous opportunity to capture value as the Internet services market evolves and grows. Being a catalyst for change has been our heritage and it will be our future."

Points of interest:

• Net income was EUR 576 million, down from 1,825 million in Q4 2007. Analysts had expected income of around EUR 970 million and sales of around EUR 13 billion. Thus results were poorer than expected, albeit within the range of some estimates.
   
• Nokia mobile device volumes were 113.1 million units, down 15% year on year and down 4% sequentially. This is set against estimated industry volumes of of 305 million units, down 9% year on year and down 2% sequentially. Nokia's market share was esitmated at 37%, down from 38% in Q3 and 40% in Q4 2007. Nokia expect a similar market share in Q1 2009, but is targeting an increased market share for later in the year.
  
  
• Services and software net sales of EUR 158 million, up 37% sequentially. This sends a positive message about Nokia's service strategy, although it is early days given the amounts of money being invested in this area.
  
  
• Eseries sales were good (same as previous quarter), especially given a 12% decrease of Nseries device from last quarter. This is a reflection of the success of the Nokia E71 for which Q4 was its first full quarter. Falling Nseries sales probably reflect increased competition from Apple, HTC and others in addition to the market conditions.
   
  
• There's a note of a EUR 1.7 billion one-off payment to Qualcomm relating to the patent and license agreements that were recently reached.
  
  
• Nokia's reduced sales and market share was largely driven by the Middle East and Africa, Greater China and Asia-Pacific markets. This was partly offset by increased market share in Europe and Latin America.
  
  Nokia noted that 'due to extreme currency volatility, our market share in the fourth quarter 2008 in some geographic areas may have been affected by products being re-routed by the distribution channels for sale to consumers in other geographic areas, particularly in Europe and Middle East & Africa'.
  

  Nokia Mobile Device Volume by Geographic Area:

  (million units)	Q4/2008	Q4/2007	YoY Change	Q3/2008	QoQ Change
  Europe	34.7	37.2	-6.7%	27.4	26.6%
  Middle East & Africa	18.2	23.6	-22.9%	21.5	-15.3%
  Greater China	12.9	20.2	-36.1%	19.8	-34.8%
  Asia-Pacific	29.9	34.0	-12.1%	33.6	-11.0%
  North America	4.1	5.1	-19.6%	4.5	-8.9%
  Latin America	13.3	13.4	-0.7	11.0	20.9%
  Total	113.1	133.5	-15.3%	117.8	-4.0%

• The average device selling price was EUR 71, down from EUR 72 in Q3. Devices and Services gross margin was 33.8%, down from 36.5% in Q3 2008. These reflect a greater proportion of lower cost devices being sold.

You can read the full results here.

Published by Rafe Blandford at 12:37 UTC, January 22nd

Section: News
Categories: Links of Interest, Industry
Platforms: General, S60 3rd Edition, S60 5th Edition