The challenging economic environment will take its toll on mobile phone sales in the fourth quarter and into 2009, Nokia’s chief executive has warned.
Olli-Pekka Kallasvuo (pictured), Nokia CEO, predicted industry mobile sales volumes in the fourth quarter will be 330 million, sequentially up from the 310 million in the third quarter of 2009.
However, this would result in a current estimate of industry mobile volume of 1.24 billion in 2008, instead of the earlier estimated 1.26 billion units, up from 1.14 billion units
Kallasvuo said that in the past few weeks, the global economic slowdown, combined with unprecedented currency volatility, has resulted in a sharp pull-back in global consumer spending.
The weaker consumer spending has impacted many industries, including the global mobile device market, Kallasvuo said. He added that the mobile device market has also been negatively impacted by the more limited availability of credit, which has limited the purchasing ability of some of its trade customers.
As a result, Nokia expects that Devices & Services sales and profitability in the fourth quarter 2008 will be negatively impacted.
Nokia’s preliminary estimate is that the industry mobile device volumes will be down in 2009 compared to 2008, impacted by the continuing overall economic slowdown.
Nokia and Nokia Siemens Networks’ preliminary estimate is that the mobile infrastructure and fixed infrastructure and related services market will be down in euro terms in 2009 compared to 2008.
In addition to the measures recently announced at Nokia and Nokia Siemens Networks, Kallasvuo said Nokia is taking decisive action to significantly reduce its cost base. It has already instituted various cost-saving actions, will curtail use of external contractors, consultants and professional services and will further cut operating expenses in 2009 in response to market conditions.
“Nokia believes that its advantages of scale, leading brand, superior logistics, low cost and broad product portfolio are competitive advantages that will enable us to distinguish ourselves from the competition in a challenging 2009,” Kallasvuo concluded.
By John Kennedy
Pictured: Olli-Pekka Kallasvuo, Nokia CEO