Nokia, the largest handset manufacturer in the world, has reported a significant decline: Net Sales are down 27 percent year on year at EUR 9.3 Billion, and 24 percent down quarter on quarter. There’s been a decline in sales for both Devices and Services and Nokia Siemens Networks (SNS) segments, with NSN reporting negative operating margins. Handset volumes have declined, due to extensive destocking by operators and distributors of their mobile device inventories. Channel inventories came down from 5-6 weeks to 4-5 weeks.
The company reported earnings per share of EUR 0.03.
Nokia’s services business – which includes Maps (but not NAVTEQ), music store (yet to be launched in India), reported net sales of EUR 150 million, up 79% year on year and down 5% quarter on quarter. Remember that Nokia will launch the Ovi store next quarter, showcased in the N97. They extended their all you can eat Comes With Music service to Australia and Singapore, and launched the Nokia Music Store in 18 countries.
Devices & Services:XpressMusic Saves The Day
The 5800 XpressMusic handset, a mass market touch screen offering, brought some cheer to Nokia in what was an otherwise gloomy quarter. The company shipped 2.6 million units of the device during the quarter, and it was their number one revenue and gross margin generating product. Nokia also launched the 5730 XpressMusic, the 5330 XpressMusic and the Nokia 5030 handsets.
Nokia’s Devices and Services segment reported sales of EUR 6.173 billion, down 33.2 percent year on year, and 24.2% quarter on quarter. Operating Profit decreased 71 percent to EUR 547 million, compared with EUR 1.9 billion in the first quarter 2008, with a reported operating margin of 8.9%.
The handsets, it appears, aren’t flying off the shelves anymore – at 93.2 million mobile devices, Nokia sold 18 percent fewer devices than last year, and 19 percent devices fewer than the same quarter last fiscal. In Asia Pacific, of which India is a segment, Nokia shipped 28.2 million handsets, down 5.7 percent from 34.1 million last quarter, and 17.3 percent from the Q1 2008. The decline in the AsiaPac region is the least, quarter on quarter – Europe is down as much as 35.7 percent.
Nokia shipped 13.7 million converged mobile devices, down from 15.1 milion units in Q4 2008. They shipped around 5 million NSeries handsets, and over 3 million E-Series handsets in the quarter. Operating margins for the segment have dropped from 21.2% for the same quarter last year, and this is being attributed to price pressure, a higher proportion of sales of lower priced products, and lower-than-expected device volumes for the high-end Nseries range.
Nokia expects the mobile devices volumes to be better, or at around the same level next quarter, and an increase in their market share, though the company adds that the overall mobile device volumes will decline around 10% from 2008 levels.