14 DAY TRIAL // Nokia achieved record quarterly and annual device volumes, net sales and ESPS. The Finish company's fourth quarter 2006 net sales increased 13% to 11.7 billion Euro compared to the 10.3 billion Euro recorded in the fourth quarter of the previous year, while its fourth quarter 2006 operating profit also increased 11% to 1.5 billion Euro (including a negative special item of 29 million Euro) compared to the 1.4 billion Euro in the fourth quarter of 2005.
Operating cash flow for the fourth quarter 2006 was 1.7 billion Euro, compared to 1.1 billion Euro for the fourth quarter 2005. As of December 31, 2006, Nokia's net debt-to-equity ratio (gearing) was -68% (-77% as of December 31, 2005).
The combined mobile device volume of Nokia's Mobile Phones, Multimedia and Enterprise Solutions business groups for the fourth quarter 2006 was a record 106 million units, up 19% sequentially and 26% year on year. Overall industry volumes for the fourth quarter 2006 reached an estimated 290 million units, up 19% sequentially and year on year.
During 2006, Nokia introduced 39 new mobile phone models, including 11 CDMA models. 23 of the devices introduced were in the mid range or high end while 7 were entry level mobile phones. In the fourth quarter of 2006, the average selling price of Nokia's mobile devices declined to 89 Euro compared to 93 Euro in the third quarter of the same year. Sequentially, the company's ASP was impacted by a lower percentage of sales from the higher end products that more than offset the relatively stable ASPs in the entry-level product sales.
The year on year decline in Nokia's ASPs was caused by the strong growth of the emerging markets, which have lower ASPs, and the growth of Nokia's market share in those markets in addition to which certain of the company's higher-end products were not viewed as sufficiently competitive in various markets.
Nokia's estimated market share for the fourth quarter 2006 was 36%, flat sequentially and up from 34% in the fourth quarter 2005. The company gained market share in Europe but recorded market share declines in Latin America, North America and Asia-Pacific. Their market share in China and Middle East & Africa remained virtually unchanged. On a year on year basis, Nokia gained market share in every area except North America in the fourth quarter 2006.
In the fourth quarter 2006, Enterprise Solutions had an operating loss of 64 million Euro, compared to an operating loss of 136 million Euro in the fourth quarter 2005. The fourth quarter 2005 operating loss included a 29 million Euro restructuring charge. The improved operating loss reflected the increased net sales and improved operating expense control. The fourth quarter net sales increased 99 percent to 305 million Euro compared to 153 million Euro in the fourth quarter of 2005.
According to Nokia, the total industry volume in converged devices reached approximately 24.6 million units for the fourth quarter, compared to an estimated 17.8 million units in the fourth quarter of the previous year.
According to Nokia CEO, Olli-Pekka Kallasvuo "Nokia was able to increase its share of the global device market significantly in 2006 to an estimated 36%, clearly solidifying our number one position in the industry. We achieved this result through the strengths of Nokia's world class brand, products, cost structure and efficiency, without sacrificing our operating margins or cash flow."