Nokia profit drops 69 percent in fourth quarter

Nokia Corp., the world's top mobile phone maker, said Thursday its profits fell 69 percent in the fourth quarter as the world economic downturn slowed handset sales.
Net profit was euro576 million ($743.62 million), down from euro1.84 billion in the same period in 2007.
Sales dropped 19.5 percent to euro12.7 billion ($16.4 billion), from euro15.8 billion.
The results came in below expectations, sending Nokia shares down 4 percent in Helsinki to euro9.82 ($12.68).
The Finnish company gave a bleak outlook for the industry, saying it expects global mobile device volumes to drop 10 percent in 2009 compared to last year. Last month, it predicted a 5-percent decrease.
Chief Executive Olli-Pekka Kallasvuo said the industry has been hit by "weaker consumer confidence, unprecedented currency volatility and credit tightness."
"We are taking action to reduce overall costs and to preserve our strong capital structure. This is clearly our top priority in the current economic environment," Kallasvuo said.
The company said it would slash costs at its handset unit by euro700 million annually, but didn't give any details.
Nokia shipped 113 million handsets in last three months of 2008, down 15 percent from the same period a year earlier. As a result, its share of the global handset market fell to 37 percent, down from 38 percent in the previous quarter and 40 percent in the fourth quarter of 2007.
The company said it expects to maintain its current market share in the first three months of 2009, and maintains its target of increasing market share in the full year.
"From an operational and structural perspective Nokia is still in a very good position," said Neil Mawston, a telecom analyst at Strategy Analytics in London. "It has a very efficient very effective supply chain."
He added, however, that Nokia's product portfolio is "looking relatively weak," especially in smart phones, where it is losing ground to Apple Inc.
A higher proportion of lower-end phones continued to push down the closely watched average selling price of Nokia handsets. It was euro71 in the quarter, down 14 percent from euro83 in same period a year earlier, but only 1 percent lower than in the third quarter of 2008.
Nokia said it sold less handsets in all regions, including China where sales dropped the most in the quarter — by 36 percent compared to the same period in 2007.
Earlier Thursday, South Korea's LG Electronics Inc. — one of Nokia's main rivals — said its mobile phone shipments grew 8 percent in the fourth quarter, though the company swung to a net loss because of other units.
One bright spot in Nokia's report was Nokia Siemens Networks, which supplies equipment for fixed and mobile networks. The joint venture with Germany's Siemens AG, saw operating profit grow 15.4 percent to euro225 million in the quarter. By contrast, Nokia's key mobile device unit reported a 61-percent drop in operating profit