Nokia result comfortably exceeds analysts' forecasts; stock soars 13% in early trading

Mobile phone giant reports net sales of EUR 12 billion for Q4/2009

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The Finnish mobile phone giant Nokia released its figures for the fourth quarter of 2009 and for the full year on Thursday, and disclosed that handset sales had turned upwards in Q4 for the first time in a year.
      The market responded to the favourable news by sending the Nokia stock soaring in Helsinki in the hours immediately after the announcement.
     
According to the company's own statements, Nokia enjoyed a 39% share of the handset market at the close of last year, up from 37% at the end of 2008 and from 38% in Q3/2009. The full-year estimated market share was 38%, down from 39% in 2008.
      Between October and the end of December, Nokia sold 127 million mobile phone handsets, a 12% improvement on the same period in 2008 and 17% up on the previous quarter.
      Just a few days ago, Strategy Analytics forecast quarterly sales of 118 million handsets for Nokia (see linked article).
     
More significantly, during the same Q4 period the company sold 20.8 million "converged mobile devices" or smartphones, or 38% more than at the same juncture in 2008.
      The company now claims a 40% share of this lucrative market, up from 35% in the third quarter of 2009.
      Nokia also marginally improved the average selling price (ASP) of its mobile devices to EUR 63, from EUR 62 in Q3 2009.
      ASP has slipped in recent years and months as the company has sought to hold market share by reducing prices, but promising sales figures from the higher end of the market will naturally be a welcome sign on this front.
     
Non-IFRS fourth quarter operating profit came in at EUR 1,473 million, up by nearly 19% on Q4/2008.
      The figure was boosted above all by the Devices & Services unit, which saw growth of 28% in operating profit to EUR 1,257 million.
      All the same, net sales for the period were down by five per cent at marginally less than EUR 12,000 million.
     
"We improved our market share in smartphones in the fourth quarter, driven by the successful launch of new touch and QWERTY models. Our performance in smartphones, combined with continuing success in the emerging markets, helped us increase sales in our Devices & Services unit, both quarter-on-quarter and year-on-year. Our solid results also owe a good deal to world class supply chain management and impressive sales execution", reported Nokia CEO Olli-Pekka Kallasvuo in the company's online statement.
     
The results came as something of a positive surprise to the markets, as an assay of analysts by the Reuters news agency had predicted Nokia would deliver quarterly profits of just over EUR 1,000 and net sales for Q4 of EUR 11,200 million.
      Nokia Siemens Networks also showed Non-IFRS fourth quarter results in the black, with an operating profit of 201 million euros, although the reported full year figures for the troubled unit remain heavily negative.
     
Nokia posted Non-IFRS full year operating profit of just over 3.5 billion euros, down 50.2% on the EUR 7,033 shown last year.
      Reported profit for the year came in at EUR 1,197 million (2008: EUR 4,966 million) on group net sales of EUR 40,984 million (2008: EUR 50 710 million), a decline of some 19% in sales and of appreciably more in profitability.
      In spite of the steep drop in profits, the markets welcomed the announcement and the positive end-of-year signals, and within an hour of the publication of the results the Nokia stock had gained 13% in Helsinki, sending the OMX Index up by more than 4%.
      The market value weighted OMXH 25 Index, which comprises the 25 most-traded stock classes, was also up by around 3% by 15:00 on Thursday.
     
Investors responded well to the idea that the latest crop of smartphones had begun to turn around a disturbing trend in Nokia sales, as the company has come under pressure recently from rivals such as Apple's iPhone or RIM's Blackberry.
      They were doubtless also pleased by the decision to pay a dividend of EUR 0.40 per share for 2009, well above the predicted EUR 0.30 of the analysts.
     
     
Further details of the Nokia results from the link below, and we will have analysis in Friday's edition.


Previously in HS International Edition:
  Nokia sales show recovery (26.1.2010)
  Nokia to introduce free navigation services to boost smartphone sales (22.1.2010)
  Nokia still choked by recession; stock falls 11% in Helsinki and New York (16.10.2009)

Links:
  Nokia Quarterly and Annual Information 28.1.2010
  Nasdaq OMX share information: Nokia

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