Announcing record result, Nokia reiterates faith in Siemens deal

Nokia, which announced a record fourth quarter result on Thursday, reiterated its commitment to the planned merger of Nokia Networks with the Telephone and Data Networks Unit of the German Siemens.
      Nokia's result - in which the company managed to preserve its 36 per cent market share and improve margins despite falling handset prices - was well received by analysts, pushing the company's stock up nearly five per cent in Helsinki amidst brisk trading.
     
Speaking at the company's headquarters in Espoo,
      Nokia President and CEO Olli-Pekka Kallasvuo said that the business logic behind the Nokia-Siemens merger remains strong, and that the new company is expected to begin operations according to the announced timetable, by the end of March, in spite of the corruption scandal that has hit Siemens.
      The merger was originally to have been implemented at the beginning of this year, but Nokia postponed the move.
      Kallasvuo said that Nokia would comment further on the matter once a report on the affair has been completed.
     
Meanwhile at a lengthy shareholders' meeting in Munich, the Siemens management came under severe criticism over the scandal involving bribery and money laundering worth hundreds of millions of euros.
      Siemens shareholders were also angered by the 30 per cent pay hikes given to the management, and by the failed rescue of mobile phone manufacturer BenQ.
      There were also complaints that the mobile network business would be falling into foreign hands. Siemens Director-General Klaus Kleinfeld noted that Siemens and Nokia will each have a 50 per cent share in the new company.
     
Nokia's fourth-quarter result for last year was the company's best quarterly showing ever. The positive figures were largely attributed to the success of Nokia's cheaper mobile telephone models.
      The profitability of the mobile phone unit dipped during the summer, but surged again in October-December. At the same time all of Nokia's competitors, particularly Motorola, have complained about tough competition.
      "If there was a price war on the market, we were not part of it", said President and CEO Kallasvuo at the Nokia press conference in Espoo.
     
Nokia achieved a result that many analysts would not have considered possible. The company not only managed to preserve its 36 per cent market share in mobile telephones but also saw improved margins against a backdrop of falling average handset prices - the average retail price per handset went down by four euros to EUR 89.
      "We have competitive products that have been on the market for some time. In the mobile telephone business, unit costs decline during the life cycle of the product, as the product ripens, so to say, and large volumes are achieved", Kallasvuo told Helsingin Sanomat.
      Kallasvuo insisted that the improved result was not caused by any changes in subcontractors. He said that Perlos, which announced massive layoffs at its Finnish factories last week, will continue to be an important subcontractor for Nokia.


Previously in HS International Edition:
  Nokia announces unexpectedly good result for last year (25.1.2007)
  Nokia Christmas sales likely to exceed 100 million handsets (23.1.2007)
  Aktia Bank says importance of Nokia cluster for Finnish growth is
  Perlos plans to shut down manufacturing in Finland - 1,200 jobs to go (16.1.2007)
  Nokia and Siemens postpone merger over corruption investigation (15.12.2006)

Links:
  Nokia Press Release, quarterly and annual information