Nokia reports 90 per cent drop in quarterly profit, in line with expectations

Nokia Corp. on Thursday said its profits plummeted 90 per cent in the first quarter as demand for mobile phones continued to weaken amid a slump.

The world's top mobile phone maker said net profit was only €122 million ($161 million) compared to €1.2 billion in the same period last year. Sales fell 27 per cent to €9.3 billion ($12.2 billion), from €12.7 billion in the first quarter of 2008. Excluding one-time items such as amortization on previous acquisitions, adjusted profit came in at €0.10 a share.

Nokia's share price surged almost 8 per cent in Helsinki to €10.92 ($14.38) after the report. This was because results were in tune with expectations, especially after Nokia had issued profit warnings beforehand.

Nokia met its own guidance for stable market share of 37 per cent in the quarter and an adjusted operating margin in the mobile devices and services division of more than 10 per cent. It came in at 10.4 per cent this quarter, about half of last year's levels. Nokia said it plans to regain market share in the second quarter.

The average selling price of a Nokia phone slipped to €65 from €71in the fourth quarter. But a raft of new phones to be launched in the next few months could help stabilize prices going forward. Nokia has fared better than many rivals during the world economic slump. But it, too, has been hit by falling demand. Last month it announced 1,700 layoffs worldwide. (See: Nokia slashes 1,700 jobs in response to declining demand)

"In what has been an exceptionally tough environment, we continue to invest in a focused manner in consumer Internet services delivered across our broad portfolio of mobile devices," CEO Olli-Pekka Kallasvuo said. "Combined these solutions will drive our future growth." He added that he was "especially pleased" with the performance of the Nokia5800, a touch-screen music phone that rivals Apple's iPhone. (See: Nokia India launches Nokia 5800 XpressMusic)

Nokia's handset sales plunged 33 per cent in January through March to €6.2 billion ($8.17 billion), leaving Nokia with a 37 per cent market share, unchanged from the previous quarter but down 2 percentage points from the first quarter of 2008. The Finnish company said it sold 93 million devices in the period, down 19 per cent from 115 million in the year-ago quarter. In the last quarter of 2008 Nokia sold 113 million handsets.