BREAKING NEWS: Nokia shares surge on better-than-expected Q2 result

Nokia-Siemens Networks reports massive loss

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The share price of the electronics company Nokia surged by more than 7.5 per cent in Helsinki on Thursday afternoon after the company announced an unexpectedly positive second quarter result. The profit per share was EUR 0.32; Reuters had reported that analysts had predicted an average EUR 0.27.
      Last year at the same time Nokia's profit per share was EUR 0.28.
      On the other hand, the company's turnover for the April-June period rose to nearly EUR 12.6 billion, up from last year's EUR 9.813 billion. The analysts' average forecast had been for EUR 12.922 billion in turnover, which means that growth in sales of handsets and networks was slightly below expectations.
      Pretax profit stood at EUR 2.4 billion, compared with last year's EUR 1.56 billion. This, too, exceeded the forecasts: predictions for group profit before tax and minority interests had been around EUR 1,600 million, not including special items.
     
The average price of a Nokia handset rose from EUR 89 in the first quarter to EUR 90.
      Nokia estimated that its market share had grown from 36 per cent in January-March to 38 per cent in April-June. The increase was attributed to an improved product selection as well as efficient logistics and a good product brand.
      The company also noted in its Thursday press release that "Nokia also believes that its market share in the second quarter 2007 was positively impacted by the clearing of certain competitors' excess device inventory in the market that was carried over from the first quarter 2007."
      This was a reference to Motorola, which delivered a surplus of handsets to its retailers late last year.
      Sales were especially good in Europe, the Middle East and Africa, as well as in the Asia-Pacific region.
      In Europe, 27.1 million handsets were sold, which is 28.4 per cent more than at the same time last year.
     
Sales in North America declined from last year by 21 per cent to 4.1 million handsets. The decline from Q1 this year was 14.6 per cent.
     
Nokia Siemens Networks, which launched its operations in April, sustained considerable losses in the first quarter of its operations. The company's Q2 result was EUR 1.3 billion in the red.
      The loss included EUR 905 million spent on reorganisation and other one-off items linked with the merger of the network operations of Nokia and Siemens.
      Nokia President and CEO Olli-Pekka Kallasvuo said that Nokia Siemens Networks plans to bring forward its target of achieving annual cost savings of EUR 1.5 billion. The company hopes to achieve this goal by the end of next year. Previously the target was the beginning of 2010.
     
Nokia management will also have been heartened by the performance of Enterprise Solutions, the unit making mobile phones directed towards business users.
      This reversed earlier losses to post an operating profit of EUR 99 million, showing a positive margin of 18.0 per cent on net sales that were almost double those of Q2/2006. The success of the Nokia E65 model is believed to have been a significant factor in the turnaround.


Previously in HS International Edition:
  Nokia organisational shakeup elevates status of services and programming (21.6.2007)
  Nokia increases mobile phone market share (15.5.2007)
  Cutbacks lead to loss of nearly one fifth of Nokia Siemens Networks jobs in Germany (7.5.2007)
  Nokia Siemens Networks get going amid reduced market expectations (3.4.2007)
  Nokia Siemens Networks debuts at Barcelona 3GSM Congress (13.2.2007)
  Announcing record result, Nokia reiterates faith in Siemens deal (26.1.2007)

Links:
  Nokia press release: Nokia reports Q2 2007 net sales of EUR 12.6 billion and EPS of EUR 0.72
  Nokia stock price (OMX)

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