Nokia seeks 40% market share after posting high quarterly result

Manufacture of mobile telephones more profitable than expected

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The rise in the share price of Nokia exceeded eight per cent on Thursday after the mobile telephone manufacturer announced an unexpectedly positive second quarter result. The only bad news was Nokia Siemens Networks (NSN), a subsidiary jointly owned by Nokia and the German Siemens, which sustained massive losses.
      "Nokia had previously estimated that sales numbers for mobile phone handsets would grow by a maximum of ten per cent in 2007, but the forecast for sales now is ten per cent or more", said Nokia President and CEO Olli-Pekka Kallasvuo in an interview with Helsingin Sanomat.
     
Nokia estimates that its market share grew from 36 per cent in the early part of the year to 38 per cent in April-June.
      This close to the all-time record of 39 percent, which was reached in three quarters, in 2002 and 2003.
      This record might be broken later this year, as Nokia's competitor Motorola is in trouble. Market researcher Strategy Analytics predicted on Thursday that Nokia would raise its market share above the 40 per cent mark later in the year.
      "I see no need to fix Nokia's market share goals even to 40 per cent", Kallasvuo said in a conference call on Thursday afternoon. He said that the goal "could be even higher".
      Another positive sign for Nokia was that the average retail price of a handset, which rose from EUR 89 in Q1 to EUR 90 in Q2.
     
Nokia attributed the good news to an improved selection of products, good logistics and a good brand.
      The company also made oblique reference to the problems that its competitor Motorola has had in selling all of the handsets that it has manufactured.
     
Problems facing Nokia Siemens Networks proved to be more difficult than anticipated, with the company showing a loss of EUR 1.3 billion in the second quarter - a record in Finnish financial history. However, most of the loss was attributed to one-off items linked with the merger.
     
Nokia Chief Financial Officer Rick Simonson said during a Nokia conference call that NSN would continue its programme of cutting costs. Simonson says that in addition to previously announced reductions in staff, NSN will look for possibilities of placing its personnel in the service of its partners in Finland and Germany.
      This will come in addition to previously-announced reductions in personnel.
      NSN is also looking for EUR 500 in further savings by stepping up the timetable of cost-cutting measures. Previously the company announced a target of saving EUR 1.5 billion, and a reduction of 9,000 jobs by 2010. Now NSN plans up to two billion in savings by the end of 2008.
      Kallasvuo did not want to say on Thursday how the further cuts would affect Finland.


Previously in HS International Edition:
  BREAKING NEWS: Nokia shares surge on better-than-expected Q2 result (2.8.2007)
  Nokia increases mobile phone market share (15.5.2007)

Helsingin Sanomat