Wednesday, January 21, 2009

Nokia Expects 10% Decline in Devices, 5% Decline in Infrastructure in '09

Citing weakened macro economic conditions, Nokia reported Q4 2008 net sales of EUR 12.7 billion, down 19% year on year and up 3% sequentially (down 18% and up 1% at constant currency). While noting the extremely limited visibility, Nokia now expects 2009 industry mobile device volumes to decline approximately 10% from 2008 levels. Nokia expects the decline to be greater in the first half than in the second half of the year. This is an update to Nokia's earlier estimate that 2009 industry mobile device volumes would decline 5% or more from 2008 levels. Furthermore, Nokia and Nokia Siemens Networks continue to expect the mobile infrastructure and fixed infrastructure and related services market to decline 5% or more in Euro terms in 2009, from 2008 levels.

"In recent weeks, the macroeconomic environment has deteriorated rapidly, with even weaker consumer confidence, unprecedented currency volatility and credit tightness continuing to impact the mobile communications industry. 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. However, it is important for Nokia to continue investing at the proper pace in future growth," said Olli-Pekka Kallasvuo, Nokia's CEO.

Some highlights from the quarterly report:

  • Devices & Services net sales of EUR 8.1 billion, down 27% year on year and down 5% sequentially (down 25% and 8% at constant currency).

  • Services and software net sales of EUR 158 million, up 37% sequentially.

  • Estimated industry mobile device volumes of 305 million units, down 9% year on year and down 2% sequentially.

  • Nokia mobile device volumes of 113.1 million units, down 15% year on year and down 4% sequentially.

  • Nokia estimated mobile device market share of 37% in Q4 2008, down from 40% in Q4 2007 and down from 38% in Q3 2008. The full year 2008 estimated market share was 39%.

  • Nokia mobile device ASP of EUR 71, down from EUR 72 in Q3 2008.

  • Devices & Services gross margin of 33.8%, down from 36.5% in Q3 2008.

  • NAVTEQ net sales of EUR 205 million, up 31% sequentially from EUR 156 million, and non-IFRS operating margin of 25.7% (18.5% in Q3 2008)

  • Nokia Siemens Networks net sales of EUR 4.3 billion, down 5% year on year and up 24% sequentially (down 4% and up 23% at constant currency).

  • Nokia Siemens Networks achieved substantially all of the EUR 2.0 billion of targeted annual cost synergies by the end of 2008.

  • Operating cash flow was negative EUR 0.3 billion, including the one-time EUR 1.7 billion lump-sum cash payment made to Qualcomm as part of the previously announced license agreement. Excluding the Qualcomm payment, operating cash flow was EUR 1.4 billion.

  • Total cash and other liquid assets of EUR 6.8 billion at the end of Q4 2008.