Nokia Posts Stellar Q4 As Market Share Hits 40%

Nokia has reported a group net profit up 44% on sales that rose 34% in the fourth quarter, announcing at the same time that its mobile phone market share hit 40% at the end of the year.

Another highlight from its year-end figures was that its Nokia Siemens network infrastructure division broke even in terms of operating margin. Meanwhile, its Enterprise Solutions (business handsets, Intellisync and firewalls) unit ended the year in the black, compared to being in the red in 2006.

The Finnish equipment vendor posted a fourth-quarter net profit of 1.83bn euros ($2.7bn), a rise of 44% on the same quarter 2006, on revenue that rose 34% to 15.7bn euros ($23.1bn). For the entire calendar year, net profit rose 67% to 7.2bn euros ($10.6bn) on revenue up 24% at 51bn euros ($75.1bn).

Mobile Phones, the largest single business unit, contributed just under half the total group revenue, with 25bn euros ($37bn) for the year. Its operating margin improved from 16.6% in 2006 to 21.7% last year, which indicates that, in addition to pulling off the trick of making headway in ultra-low-price handsets for the developing world profitably (something Motorola singularly failed to do), it has also managed, through lean-and-mean procedures and shifting a lot of production to lower-cost bases, not to let that impact overall profitability.

The Espoo-based conglomerate also announced that its market share in handsets hit 40% at the end of the year, up from 39% at the end of the third quarter and 36% a year earlier. This means that, by some analysts’ figures, Nokia’s share is now more than the combined shares of the next three vendors: Samsung, Motorola, and Sony Ericsson.

Enterprise Solutions, which was for a long time the weak link in the chain, went into profitability, driven primarily by the success of the Eseries handsets, which drove sales as a whole.

The other good news was that Nokia Siemens, though posting an operating loss for the year as a whole of 9.8bn euros ($14.5), nonetheless broke even in the fourth quarter, which is better than either Alcatel-Lucent or Ericsson achieved. This uptick in the last three months of the year was attributed to increased sales, with revenue more than double that in the same period of 2006.

Our View

This is a stellar year-end set of figures from the Finnish powerhouse, with even Enterprise Solutions benefiting from the Eseries factor.