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Nokia Q3 Earnings Report: Mixed Signals

October 17, 2009 in Wireless Industry News

Nokia released their quarterly earnings report two days ago, and at first glance the numbers were horrendous. Nokia managed to lose 426 million Euros, net sales were down 20% (year over year, or the change from last year), Devices & Services sales were down 20% while profit margin fell 3.1%, average selling price (ASP) dropped to 62 Euros, and mobile device shipments dropped 8% (yoy). But there were some positive highlights in the report.

The Good

- Nokia’s market share has stayed flat at 38%.
- Average selling price for smartphones actually rose 4% to 190 Euros from last quarter.
- Mobile device shipments will decrease 7% (from 2008) instead of the previously forecast 10%. Uh, yay?
- Nokia’s phone shipments saw some decent improvement vs. Q2, in Europe, Middle East/Africa, Asia, and Latin America.
- More “converged devices” shipped out compared vs. Q3 2008 (16.4 vs 15.5 mil), down slightly from 16.9 mil in Q2

The Bad

- Operating loss of 426 million Euro, compared to 1.5 billion Euro profit in Q3 2008.
- Nokia’s smartphone market share decreased to 35%, down from 41% in Q2
- Sales in the Devices & Services division fell 19.6% (yoy), but were up 5% from last quarter.
- Across the board average selling price: 62 Euros, down from 72 Euros, mostly due to higher percentage of sales from the “budget” phones
- North America saw a fat 31.1% drop in phone shipments compared to last year (-3.1% quarterly).

And the Why

- According to Nokia, a “component shortage across the portfolio,” was mainly responsible for the subpar results in the phone department. Now which component was that?
- The other reason was the standard “deteoriating global economic conditions” bit.

I’m not sure if the lackluster smartphone numbers mean that the N97 didn’t sell as well as expected, or because Nokia didn’t really release any smartphones during the quarter minus the N86. I’d expect next quarter’s numbers to be a heck of a lot better thanks to a couple low-end touch models (5530 XpressMusic, X6), as well as the phone/tablet/mini-computer that everyone’s going gangbusters about, the N900. Oh yeah, and that netbook too.

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