Nokia Posts 40% YOY Drop in Profits in Q2

Today, leading mobile phone maker Nokia announced its financial results for the second quarter of the ongoing year, and posted net profit of €221 million for the three months period, which marks an impressive drop from the €380 million net profit the company announced for the second quarter of the last year. According to the company, the profits are based on net sales of EUR 10.0 billion, which mark an increase of 1 percent on a yearly basis, and a 5 percent growth compared to the previous quarter.

The Espoo, Finland-based handset vendor managed to top a total mobile device volume of 111.1 million units, up 8 percent from the second quarter of the last year, and up 3 percent from the first quarter of 2010. The company shipped 24.0 million converged mobile devices (smartphone and mobile computer), marking an increase of 42 percent from the same time frame last year, and 12 percent from the previous quarter. However, the average selling price of its devices was EUR 61, down from EUR 62 in Q1 2010.

Other highlights from the company's financial announcement include:
- Devices & Services net sales of EUR 6.8 billion, up 3% year-on-year and 2% sequentially (down 2% and 1% at constant currency).
- Services net sales of EUR 158 million, up 7% sequentially; billings of EUR 295 million, up 29% sequentially.
- Devices & Services gross margin of 30.2%, down from 34.0% in Q2 2009 and 32.4% in Q1 2010.
- Devices & Services non-IFRS operating margin of 9.5%, down from 12.2% in Q2 2009 and 12.1% in Q1 2010.
- Nokia Siemens Networks net sales of EUR 3.0 billion, down 5% year-on-year and up 12% sequentially (down 11% and up 10% at constant currency).
- Nokia operating cash flow of EUR 944 million.
- Total cash and other liquid assets of EUR 9.5 billion at the end of Q2 2010.

As for the remaining of the ongoing year, the company says that its mobile device value market share should drop slightly from last year, though the industry mobile device volumes should go up 10 percent in 2010 compared to the previous year. The company targets a flat market share during the ongoing year, and expects its Devices & Services net sales to be of EUR 6.7 billion to EUR 7.2 billion in the third quarter 2010.

“In smartphones, we continue to renew our portfolio. We believe that the Nokia N8, the first of our Symbian^3 devices, will have a user experience superior to that of any smartphone Nokia has created. The Nokia N8 will be followed soon thereafter by further Symbian^3 smartphones that we are confident will give the platform broader appeal and reach, and kick-start Nokia's fightback at the higher end of the market,” Olli-Pekka Kallasvuo, Nokia CEO, stated.

Follow me on Twitter @ionut_arghire.