Nokia Announces Q4 Results, Posts 19% Lower Net Sales

Nokia has released today its financial results for the fourth quarter of 2008. The company posted net sales of EUR 12.7 billion, marking a downgrade of 19 percent compared to the same period last year and a 3-percent growth sequentially. At the same time, the company announced negative operating cash flow, which includes a one-time cash payment made to Qualcomm as part of an already-announced license agreement.

According to the Finnish giant, during the fourth quarter its registered Devices & Services net sales lowered 27 percent from last year and 5 percent from the third quarter of 2008, to a total of EUR 8.1 billion. On the other hand, the company's services and software net sales grew 37 percent sequentially, to EUR 158 million. Nokia announced estimated mobile device volumes of 305 million units, 9 percent lower year on year and 2 percent sequentially.

“In recent weeks, the macroeconomic environment has deteriorated rapidly, with even weaker consumer confidence, unprecedented currency volatility and credit tightness continuing to impact the mobile communications industry. We are taking action to reduce overall costs and to preserve our strong capital structure. This is clearly our top priority in the current economic environment. However, it is important for Nokia to continue investing at the proper pace in future growth. We believe Nokia has a tremendous opportunity to capture value as the Internet services market evolves and grows. Being a catalyst for change has been our heritage and it will be our future,” stated Olli-Pekka Kallasvuo, Nokia CEO.

The operating profit of the maker during Q4 2008 dropped 80 percent compared to the same time frame a year before, down from EUR 2.5 billion in Q4 to EUR 492 million in the fourth quarter 2008. The company posted operating margin of 3.9 percent, much lower than the 15.9 percent posted in 2007. The maker also announced non-IFRS operating profit down by 53 percent to EUR 1.2 billion, and non-IFRS operating margin of 9.8 percent.

Nokia forecast further decline in the industry mobile device volume during the first quarter of the year, and stated that the drop would be higher than the seasonal sequential decrease usually registered in Q1 the past few years. At the same time, the company's market share is expected to remain at the same level as last quarter, yet it plans to increase its market share this year.

According to the Finnish mobile phone maker, the industry mobile device volumes are expected to decline to a greater extent than previously predicted, almost 10 percent compared to last year. In addition, the company says that the drop should be seen mainly in the first half of the year, which would suggest that it expects the market to recover a little throughout 2009.