Nokia reports €559 million loss

Adverse market conditions in the infrastructure segment causes it to falter

Nokia reported a third-quarter loss of €559 million (US$833 million) that it blamed on charges related to its Nokia Siemens business. Sales of €9.8 billion were down 20 percent compared to last year, the company said on Thursday.The main reason for the loss is a €908 million impairment charge related to Nokia Siemens. It is also paying €29 million restructuring charge related to the infrastructure company, according to Nokia. Both tough competition and adverse market conditions played a part in Nokia Siemens' problems, it said.

It's clear that Nokia Siemens is losing market share, but Nokia is still backing the company as it tries to turn around its fortunes, Nokia CEO Olli-Pekka Kallasvuo said during a conference call. On the handset side the company saw a decline in units sold year-to-year, but an improvement from the immediately previous quarter. It sold 108.5 million mobile phones, down 8 percent from a year ago. However, it sold 5 million more than during the second quarter. The company has seen improved demand in many markets, it said.

"It is encouraging to see some signs of recovery in our markets. But let's be clear, uncertainty in end-consumer demand remains," saidKallasvuo. "I expect Q4 to be the best quarter of the year in terms of net sales, volumes and margins," said Kallasvuo.Nokia's total mobile phone market share held steady at 38 percent and the average price per phone at €62, compared to the second quarter.The phone vendor has begun to break out reporting of its smartphone and mobile computer sales, which totaled €3.1 billion during the third quarter. The average smartphone sales price was €190, up from €182 during the second quarter.

But the overall number of smartphones sold decreased during the third quarter to 16.4 million, compared to 16.9 million in the previous quarter, according to Kallasvuo.Nokia could have sold more smartphones, but a lack of components, including camera modules, held it back somewhat, he said. The increase in average sales price in the smartphone segment is most likely thanks to slightly higher volumes of the N97, according to Carolina Milanesi, research director at Gartner, who thinks that Nokia still has work to do in the high-end segment.

The N97 did very well, and sold 1.8 million units. Nokia's Symbian-based touch phones -- the N97, the 5800 XpressMusic and the 5530 XpressMusic -- sold a combined 5.7 million units, which represents a sequential unit growth of 35 percent, according to Kallasvuo.

Competition in the smartphone segment is constantly accelerating, and the Nokia-backed Symbian platform has a lot of work to do. For example, the user interface needs to be improved, Kallasvuo said.

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Mikael Ricknäs

IDG News Service
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