Nokia boosts profit, helped by smartphone sales

However, the company has to continue to improve its portfolio, analyst said

Nokia reported a fourth-quarter profit of €948 million (US$1.3 billion), up 65 percent from a year earlier thanks to improved phone sales.

As the average price of phones declined from the year earlier, however, sales of €12.0 billion were down 5 percent compared to the same period in 2008, but up 22 percent compared to the previous quarter, it said on Thursday.

Nokia sold 126.9 million units, a 12 percent improvement over the fourth quarter in 2008 and up 17 percent compared to the previous quarter.

The key to the growth was better performance in the smartphone segment, according to a statement. Nokia sold a total of 10.7 million units of its Nseries and Eseries, an increase of 1.8 million units over the third quarter, which helped expand its market share in the smartphone segment to 40 percent, it said.

Nokia's overall market share grew to 39 percent, up from 37 percent a year ago. Compared to the fourth quarter 2008 Nokia grew its unit share in all markets, except for the U.S., where the Finnish phone manufacturer still struggles.

Selling more smartphones also increased Nokia's average sales price compared to the third quarter, but only by €1. It is now €63, which is still €8 lower than it was at the end of 2008. An increase in the operating margin for devices and services, from 12.1 percent to 15.4 percent, helped make up for the decline in average sale price.

The improved smartphone sales is good news for Nokia, according to Francisco Jeronimo, research manager for European Mobile Devices at IDC. One of the devices that boosted smartphone sales was the N97 mini, he said.

However, Nokia has to continue to evolve its smartphone portfolio, including improving the user interface on its devices, according to Jeronimo. The competition in the smartphone segment is already tough, and will get even more intense in 2010, he said.

Nokia was also helped by sales in emerging markets, which continues to be an important segment for Nokia, according to Jeronimo.

In 2010, Nokia expects that unit sales will grow by 10 percent, compared to last year, it said.

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