14 DAY TRIAL // Finnish mobile phone maker Nokia announced today its financial results for the first quarter of the ongoing year. As expected, the company's performance was drastically affected by the financial recession, yet it still registered a large market share of 37 percent, unchanged from the fourth quarter of 2008, though down from the 39 percent it registered in the same period a year ago.
Nokia's net sales went down 27 percent on a yearly basis to EUR 9.3 billion, while also dropping sequentially (24 percent and 25 percent at constant currency). Devices & Services net sales plunged 33 percent year on year to EUR 6.2 billion, also down 24 percent sequentially (31 percent and 23 percent lower at constant currency).
Service net sales went up 79 percent compared to the first quarter of 2008, reaching EUR 150 million (billings of EUR 166 million), yet went down 5 percent on quarter. In addition, the company estimates industry mobile device volumes of 255 million units, 14 percent and 16 percent lower year on year and sequentially. The Nokia mobile device volumes also plunged, registering a 19 percent drop from Q1 2008 and 18 percent drop from Q4 2008, down to 93.2 million units.
Its flagship model, Nokia 5800 XpressMusic, reached 2.6 million units in volume, and the company also posted cumulative shipments of more than 3 million units since the launch of the phone. Nokia also announced that Devices & Services gross margin remained unchanged from Q4 2008 at 33.8 percent, that the mobile device ASP was EUR 65, lower than EUR 71 in Q4 2008, that the operating cash flow was EUR 276 million, and that its cash and other liquid assets at the end of Q1 2009 were of EUR 8.1 billion.
“In what has been an exceptionally tough environment, we continue to invest in a focused manner in consumer Internet services delivered across our broad portfolio of mobile devices. Combined, these solutions will drive our future growth. As an example in Q1, I am especially pleased with the performance of our first mass market touch product, the Nokia 5800 XpressMusic. Together with Comes With Music, it is a great example of Nokia providing solutions that consumers value,” stated Olli-Pekka Kallasvuo, Nokia CEO.
As for the rest of 2009, Nokia forecasts that the market will recover. During the second quarter, industry mobile device volumes should be the same or higher, while the company's mobile device market share is expected to grow in the time frame. Compared to last year, the manufacturer says that industry mobile device volumes should drop 10 percent in 2009, yet the second half of the year is expected to be better than the first one.
“Regarding the health of the overall mobile device market, the inventory already in the sales channels decreased substantially during Q1 due to extensive destocking by operators and distributors. This adversely impacted our sales volumes in the quarter. However, it has also resulted in the demand picture becoming more predictable as we enter the second quarter,” added Olli-Pekka Kallasvuo.