Wednesday, April 15, 2009

Nokia and NSN Expect 2009 Infrastructure Sales Decline of 10%

Nokia reported net sales of EUR 9.3 billion, down 27% year on year and sequentially. Reported operating profit decreased 96% to EUR 55 million, compared with EUR 1.5 billion in the first quarter 2008. Looking ahead, Nokia and Nokia Siemens Networks now expect the mobile infrastructure and fixed infrastructure and related services market to decline approximately 10% in Euro terms in 2009, from 2008 levels. This is an update to Nokia and Nokia Siemens Networks' earlier estimate that the mobile infrastructure and fixed infrastructure and related services market would decline 5% or more in Euro terms in 2009, from 2008 levels.

"In what has been an exceptionally tough environment, we continue to invest in a focused manner in consumer Internet services delivered across our broad portfolio of mobile devices. Combined, these solutions will drive our future growth. As an example in Q1, I am especially pleased with the performance of our first mass market touch product, the Nokia 5800 XpressMusic. Together with Comes With Music, it is a great example of Nokia providing solutions that consumers value.

Regarding the health of the overall mobile device market, the inventory already in the sales channels decreased substantially during Q1 due to extensive destocking by operators and distributors. This adversely impacted our sales volumes in the quarter. However, it has also resulted in the demand picture becoming more predictable as we enter the second quarter."

Some highlights for Q1:

  • Devices & Services net sales of EUR 6.2 billion, down 33% year on year and down 24% sequentially (down 31% and down 23% at constant currency).

  • Services net sales of EUR 150 million (billings of EUR 166 million), up 79% year on year and down 5% sequentially.

  • Estimated industry mobile device volumes of 255 million units, down 14% year on year and down 16% sequentially.

  • Nokia mobile device volumes of 93.2 million units, down 19% year on year and down 18% sequentially.

  • Nokia 5800 XpressMusic volumes of 2.6 million units, with cumulative shipments of more than 3 million units since the smartphone's launch in late November 2008.

  • Nokia estimated mobile device market share of 37% in Q1 2009, down from 39% in Q1 2008 and unchanged from Q4 2008.

  • Nokia mobile device ASP of EUR 65, down from EUR 71 in Q4 2008.

  • Devices & Services gross margin of 33.8%, unchanged from Q4 2008.

  • NAVTEQ net sales of EUR 132 million, down 36% sequentially from EUR 205 million, and non-IFRS operating margin of 3.7% (25.7% in Q4 2008)

  • Nokia Siemens Networks net sales of EUR 3.0 billion, down 12% year on year and down 31% sequentially (down 9% and down 30% at constant currency).

  • In the first quarter 2009, the total mobile device volumes for Nokia's Devices & Services group were 93.2 million units, representing a decline of 19% year on year and 18% sequentially. The overall industry mobile device volumes for the same period were 255 million units based on Nokia's preliminary estimate, representing a 14% year on year decrease and a 16% sequential decrease. The lower sales volumes for Nokia and the industry, both year on year and sequentially, were primarily driven by the negative impact of the rapidly deteriorating global economic conditions, including weaker consumer and corporate spending, severely constrained credit availability and unprecedented currency market volatility. The sequential volume decline also reflected typical seasonal decreases in the first quarter. In addition, extensive destocking by operators and distributors of their mobile device inventories adversely affected sales volumes by manufacturers, including Nokia, during the first quarter 2009.


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