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Nokia Q4-10 Profits Fall 26% YoY, Despite Increase In Average Selling Price

The devices and services segment business of handset major Nokia contributed EUR 8.5 billion to net sales for the quarter ending December 31st 2010, up 4% year-on-year and 18% sequentially. Much of Nokia’s revenues for this segment still come from devices, but services is growing: their services business contributed EUR 201 million in terms of net sales, up 26% sequentially. The devices and services segment reported a 24% decline in operating profit year-on-year, and an increase of 28% quarter-on-quarter. Billings for the services segment were up 8% sequentially, at EUR 352 million. Gross margin for the devices and services segment declined to 29.2%, down from 34.3% in Q4-2009 and up 29% in Q3-2010.

Overall, Nokia reported net sales of EUR 12.7 billion for the quarter, up 6% year-on-year and 23% sequentially, but its operating profit declined 26% year on year to EUR 1090 million, even though it increased 72% quarter on quarter.

Devices & Services

– Device Sales & Marketshare: Device sales for Nokia were down 3% year-on-year and up 12% sequentially, at 123.7 million units. According to Nokia estimates, the handset market for the quarter, in terms of device volumes, was 402 million units, 12% up year on year, and 11% sequentially. Nokia has, clearly continued to underperform the market. This led to a further reduction in global marketshare for the company, down to an estimated 31% Q4-2010, compared to 35% in Q4-2009; though it increased by 1% quarter on quarter.

– Nokia converged mobile devices (smartphone and what Nokia calles “mobile computer”) reported volumes of 28.3 million units, up 36% year-on-year and 7% sequentially. The company also estimates that the overall mobile industry shipped around 90.5 million converged mobile devices globally during the quarter, an increase of 73% year-on-year and 29% sequentially. Nokia claims its preliminary estimated share of the converged mobile device market was 31% in the fourth quarter 2010, compared to an estimated 40% in Q4 2009 and 38% in Q3 2010. This implies that Nokia’s market share in the Smartphone market has declined significantly. Nokia blames the intense competitive environment, component shortages and supply & logistics challenges for the YoY decrease in its sales. The sequential increase is due to the increased seasonal demand in the fourth quarter.

Nokia’s overall Average Selling Price (including services revenue) rose from EUR 65 in Q3 to EUR 69.

– The Ovi Store is now registering more than 4 million downloads a day, compared with more than 2.7 million a day reported in Q3 2010, due to high traffic from new devices like the Nokia N8 and Nokia C7, the widespread introduction of operator billing and increased availability of local applications and content specific to individual markets.

– Maps  now include coverage of 180 countries and regions in total, with 100 of them navigable. Additionally, more than 100 cities around the world have dedicated pedestrian navigation. The latest version of Ovi Maps lets users download maps directly to their device over Wi-Fi  and use mapping that now includes public transport lines for subways, trams and trains in more than 80 cities globally.

In terms of its expectations for the coming Quarter, Nokia expects Devices & Services net sales to be between EUR 6.8 billion and EUR 7.3 billion.


India Specific Information:

– India continues to remain the second largest market for Nokia in terms of net sales, with China topping the list.

Nokia and Intuit announced an alliance to develop and deliver an innovative new mobile and web based marketing service for small businesses around the world. The service is already being piloted commercially in two cities in India. More here

– As part of the Nokia Money initiative, the first commercial services called “Mobile Money Services by YES Bank” started in the cities of Pune, Chandigarh and Nashik in India. In November, Nokia tied-up with the Union Bank of India to offer “Union Bank Money” across the country. More here

– NAVTEQ Opens R&D Lab In Mumbai; Powers MobileNavigator For India – More here

Nokia Siemens Networks added three more 3G customers in India, announcing contracts with Idea Cellular, Vodafone Essar and Aircel.

Life Tools, Nokia’s  life improvement mobile information services for emerging markets, was launched in Nigeria, adding it to the service which already operates in India, Indonesia and China. Nokia also partnered with IGNOU to offer IGNOU Certificate Programme in English. More here

Nokia Ends Ovi Music Bundling In Most Markets; Launches Hindi Ovi Store
– Our Nokia coverage

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