Operating profits plunge 38pc at Nokia

18 Jul 2008

The world’s largest mobile manufacturer posted second-quarter sales of €13.2bn on the back of increased market share and predicts the next wave of growth will be from devices linked with services.

Nokia reported a 4pc increase in net sales of €13.2bn, out of which devices accounted for €9.2bn of revenue, down 1pc on the year.

Services and software sales, however, were up 42pc to €119m, while sales at the Nokia Siemens Networks division were up 18pc to €4.1bn.

However, the company saw its operating profits fall by 38pc from €2.3bn last year to €1.4bn. The company attributed this decline to the costs of forming the Nokia Siemens Networks division.

Looking ahead to the next quarter, Nokia predicted that the sales of mobile devices will continue to grow and that across the industry mobile device volumes will grow 10pc from the 1.14 billion units sold in 2007.

“Nokia delivered increased device market share and strong underlying profitability in the quarter,” said Olli-Pekka Kallusvuo (pictured), chief executive of Nokia.

“Looking at the rest of the year, we are optimistic and have had good feedback about the broad range of new products we expect to sell in our device business. In the second quarter, we saw good momentum in the early stages of our services and software business, and we believe that the next wave of growth will be driven by devices linked with services.

“On the infrastructure side, Nokia Siemens Networks delivered a second quarter with good net sales growth and improved profitability,” Kallusvuo said.

By John Kennedy

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years