Nokia sales rebound fails to rescue margins

Nokia's 22% sales rise for Q4 2009 suggests the world's appetite for mobile phones is improving.

Nokia's 22% sales rise for Q4 2009 suggests the world's appetite for mobile phones is improving.

But it came too late to rescue annual sales figures that were down nearly 20% to €41bn and earnings which plunged 77% to €0.24 per share.

Reporting its annual results Nokia CEO Olli-Pekka Kallasvuo said new touch-screen and qwerty models in Q4 had helped Nokia grow its share of the smartphone market to 40% from 35%, and for the handset division to show a €785m operating profit for the year.

Nokia sold 126.9 million handsets and other devices, up 12% for the year and 17% on the quarter. It estimated world market volumes for the same period at 329 million units, a rise of 8% on the year and 14% on the quarter, which suggests it is taking market share.

Total sales of smartphones or "converged devices" totalled 52.4 million units, up from 47.0 million in Q3 2009. Nokia's market share was 20.8 million units, up from 15.1 million a year ago and 16.4 million units the previous quarter.

Kallasvuo said, "Our focus remains firmly on execution, especially around user experience. Here I want to highlight our move to shake up the navigation market with free walk and drive navigation on our smartphones, a good example of how we are leveraging our assets to bring real benefits to consumers."

Pete Cunningham, an analyst with research firm Canalys, said Nokia's results slightly exceeded his expectation. He said he had anticipated Nokia overcoming the shortage of camera and display components in Q3, and the sales jump reflected this. "It's good news for the industry," he said.

Cunningham warned that 2010 was still likely to be difficult. Network operators were driving smartphone sales to increase income and average revenues per user via data traffic, he said. "Also, different markets are recovering at different speeds," he said.

Cunningham said the ability to deliver applications and content were key performance indicators in future. "Apple has shown the way with iTunes and App Store, which are still better than anything else in the market," he said.

He believed Nokia was taking a wider view of the market. "Nokia's decision to offer free maps and navigation on its smartphones was probably accelerated by Google, but it was clearly on their roadmap," he said.

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