Nokia sales fall dramatically by 25pc in Q2

16 Jul 2009

The king of mobile device players Nokia has reported a tough second quarter with sales of €9.9bn down 25pc year-on-year and down 7pc on the previous quarter. It is pinning its future hopes on PC and mobile convergence.

The company’s largest division, Devices and Services, reported sales of €6.6bn, down 28pc year-on-year. The division nonetheless increased margins from 33.8pc in Q1 to 34pc in Q2.

The company shipped device volumes of 103.2 million units, down 15pc year-on-year and down 11pc on Q1.

The company’s share of the global mobile device market also appears to be slipping, down to 38pc from 40pc a year ago.

Software revenues from applications for devices fell from €65m in Q1 to €62m in Q2, despite the launch of its flagship Ovi store.

Its infrastructure division, Nokia Siemens Networks reported sales of €3.2bn, down 21pc year-on-year and down 7pc on Q1.

The company reported an operating cash flow of €716m and said that total cash and other liquid assets stood at €7bn at the end of the second quarter.

“Nokia put in a solid performance in what was another tough quarter. We increased our share of the global mobile device market sequentially to an estimated 38pc and grew our smartphone market share to an estimated 41pc,” explained the company’s CEO, Olli-Pekka Kallasvuo (pictured).

“As a result of strong operational execution, underlying operating margins improved sequentially in all segments. Competition remains intense, but demand in the overall mobile device market appears to be bottoming out. As before, we are continuing to tightly manage our operating expenses.

“We are balancing short-term priorities with our longer-term growth ambitions, as elements of the mobile handset, PC, internet and media industries converge to form a new industry. Consumers will increasingly expect devices and services designed as integrated solutions. To capture this opportunity, we are accelerating our strategic transformation into a solutions company,” Kallasvuo said.

Looking ahead to the third quarter, Nokia said it expects industry mobile device levels to remain at the same level or up slightly and the company expects to maintain global handset market share at 38pc.

Overall for 2009, Nokia said it expects industry mobile device volumes to decline 10pc from 2008 levels and its share to remain flat.

Nokia Siemens Networks expects the mobile and fixed infrastructure market to also fall 10pc in the third quarter.

By John Kennedy

Pictured: Nokia CEO, Olli-Pekka Kallasvuo