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Nokia Reports 35 Percent Gain in Profit

Posted on: Thursday, 16 October 2003, 06:00 CDT

Cell phone maker Nokia Corp. reported a 35 percent gain in profit for the third quarter despite falling revenues, predicting growth through the end of the year and into 2004 for the entire industry.

The world's largest cell phone maker said Thursday it earned euro823 million ($960 million), or euro0.17 (20 cents) per share in the just-ended quarter, up from euro610 million or euro0.13 in the same period in 2002, when results were hurt by write-offs and bad loans.

Sales fell to euro6.87 billion ($8 billion) for the three months ended Sept. 30, from euro7.22 billion a year earlier.

The figures were largely in line with analysts' expectations, but Nokia's U.S. shares were down 61 cents, or 3.5 percent, to close at $16.62 on the New York Stock Exchange.

Sales of its cell phones remained flat, at euro5.62 billion ($6.56 billion), compared with year-ago levels, but Nokia said the number of handsets sold rose by 23 percent to 45.5 million units - a nearly 39 percent market share of the 118 million handsets sold by all producers worldwide in the quarter.

Last year, Nokia accounted for about 36 percent of all mobile handsets sold worldwide, according to Gartner Dataquest, while the company claimed a 38 percent market share.

The ailing network equipment division saw a 21 percent drop in sales to euro1.2 billion ($1.4 billion) as wireless operators continued to hold back spending on existing networks and delay or scale back plans for newer, faster networks.

"Nokia performed much as expected, with networks dragging it down," said Jussi Hyoty, an analyst at FIM Securities. "The most important thing was that its handset margins performed and it looks like revenue will develop in the fourth quarter as expected."

"We can be happy with the way in which, in this situation, things have turned out in the third quarter and I think the Christmas season in the fourth quarter is promising to be a good one," said Nokia's chief executive, Jorma Ollila.

Nokia predicted that the global handset market would grow to about 460 million units this year - up from an earlier estimate of between 400 and 450 million units - and that next year would be good for the industry.

"We look at 2004 with a fair bit of optimism now that we have also seen the handset growth of 15 percent overall globally (in 2003)," Ollila said. "I think that 2004 really promises to be a year to look forward to for all of our industry and for us in Nokia."

Nokia, the bellwether of the industry, which last week launched the much hyped N-Gage - a hybrid cellular phone and gaming console - also unveiled several new color-screen, radio, camera and niche products.

Based in Espoo, just outside the Finnish capital, Nokia has sales in 130 countries and employs 53,000 workers.

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On the Net:

Nokia: http://www.nokia.com

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