Thursday, April 16, 2009

Nokia Suffers 90% Loss Due To Drop in Phone Sales

. Thursday, April 16, 2009

By stockOzone team

Worlds largest mobile maker Nokia, on Thursday reported an whopping 90% drop in first-quarter profit, in line with expectations, as the economic downturn sapped demand for new phones.

Net profit at the Finnish giant fell to 122 million euros ($161 million), or 0.03 euro a share, from 1.22 billion euros, or 0.32 euro a share, earned in the year-earlier quarter. Excluding one-time items such as amortization on previous acquisitions, adjusted profit came in at 0.10 euro a share.

Sales fell 27% to 9.3 billion euros, hit by lower consumer and corporate spending and a severe lack of credit, Nokia said.

The consensus forecast was for earnings of 0.10 euro a share on sales of 9.7 billion euros, according to SME Direkt.

Shipments usually fall around 10% from the fourth to the first quarter because of the impact of the holiday season. Nokia had warned that the drop would be steeper than usual.

"Nokia's results saw further deterioration with sales, average selling prices and margins continuing to fall further year on year but unlike the final quarter of 2008, performance largely met expectations," said Geoff Blaber, analyst at U.K.-based telecoms consultancy CCS Insight.

Nokia shares rose 12.6% in Helsinki after the results.

Nokia is launching a high-end touch-screen model this year, following a successful start to its mid-range 5800 touch device, the company is slightly late to the party after the success of Apple (AAPL) and Samsung in this domain. WestLB's Langer warned that the success of the 5800 phone was only serving to offset a slump in sales for Nokia's high-end N-Series, which would lead to further price erosion.

Disclosure: Author does not own any of the stocks discussed here.

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