At the end of a quarter that saw the launch of Nokia’s much hyped N97 phone, and on the back of discouraging results in the last quarter, leading handset manufacturer Nokia reported a growth in its device sales and services revenues – up by 6.7 percent to Euro 6.58 billion over the previous quarter. The company reported an earnings per share of Euro 0.15, up significantly from EUR 0.03 reported in Q1.
However, Nokia is still to recover from the decline in handset sales due to destocking of inventories – revenues are still down 27.5% compared to the corresponding quarter last year.
Nokia CEO Olli-Pekka Kallasvuo said that the mobile device market appears to be bottoming out, and the company has put in “a solid performance”, increasing their global device market share to 38 percent, and smartphone marketshare to 41 percent. Kallasvuo said the company is “balancing short-term priorities with our longer-term growth ambitions” and accelerating its “strategic transformation into a solutions company” as elements of the mobile handset, PC, internet and media industries converge to form a new industry.
Nokia reported a quarter on quarter growth in net sales of 6.9 percent and a 50.8 percent increase in operating profit. Year on year, however, net sales declined 24.6 percent while operating profit declined 62.3 percent.
Nokia’s expecations from Q3 are muted: the company expects device volumes to remain around the same or slightly improved, and no significant change in marketshare – the company had earlier expected to increase its marketshare in 2009.
Devices & Services
Nokia’s share of the handset market is 38%, and has risen from 37% in Q1-2009. During the quarter, the total Nokia mobile device volumes were 103.2 million units, up 11 percent from last quarter, though 15% down year on year.
Smartphone sales have risen with Nokia shipping 4.7 million E-series devices, this is 41% higher than the previous quarter and up 148% year on year. It also continued its success with the 5800 Xpress Music range phones and shipped 3.7 million compared to the 2.6 million units last quarter.
Operating profit from the devices and services segment rose 24.9% to Euro 802 million and the non-IFRS operating margin was 12.2%.
Second quarter 2009 saw an improved in net sales for the Devices & Services segment, with a 6.7 percent increase, though year on year, net sales declined 27.5% to EUR 6.586 billion, compared with EUR 9.1 billion in the second quarter 2008. Devices & Services net sales were down year on year in all geographic areas. This is being attributed to lower volumes, combined with decline in the average selling price.
The N97 & N Series Phones
Nokia hasn’t said much about the N97, except that the company shipped 0.5 million units in the month of June. Nokia invited Indian developers to create applications for the N97 and put them on its marketplace Ovi. The Ovi Store attracted downloads from 180 countries. The company shipped 4.7 million N Series phones.
Interestingly, NAVTEQ has extended its contract with MSN Direct for NAVTEQ traffic on Microsofts Live Search Maps. Apart from this, the company has introducted LocationPoint, a location based advertising service for the mobile, in several European countries. Navteq has also launched Motorway Junction Objects in Australia, which offers a 3D animation of junctions. This service is also include the US and Europe. NAVTEQ has also signed up to provide with Samsung access to Visual Content, Speed Limits, Extended Lanes and NAVTEQ Discover Cities products.
Services contributed EUR 140 million in the second quarter 2009, representing 18% year on year growth and a 7% sequential decrease. Nokia’s services segment includes Ovi store which it launched this quarter in India as well as other countries, Maps (excluding NAVTEQ) and Nokia Music Store.
Nokia Music Store: The Nokia Music Store is now available in 21 countries, and Nokia extended the all-you-can-eat Comes With Music service to Brazil, Germany, Italy, Mexico, Sweden and Switzerland.
Nokia Messaging: It also rolled out its messaging service in 40 countries. Around 600,000 users had activated the Ovi Mail service by the end of June 2009.
Nokia Life Tools: was launched during the quarter in India, and made available on the 2330 and 2323 devices, among others.
NSN: The company expects its telecom infrastructure and equipment arm Nokia Siemens Networks to lose market share due to “declines in certain product businesses”. NSN has reported positive earnings this quarter with operating profits of Euro 2 million, compared to the loss of Euro 122 million in Q1 09. It saw a 7% rise in net sales of Euro 3.2 billion from Q1 and 21% rise year on year.
There was reduced expenditure by Nokia – Euro 61 million compared to Euro 77 million in 1Q-2009 and was primarily due to a less volatile financial exchange environment, which was partly offset by higher expenses related to the new debt transactions between Nokia and NSN, the company has said.