Nokia has announced its Q1 results revealing a 96 per cent drop in profits year on year and a 27 per cent drop in sales.
Operating profit dropped to €55 (£48) million compared with €1.5 billion in Q1 last year and dropped 89 per cent compared with the previous quarter.
Nokia claimed that destocking by operators and distributors was partly to blame for the drop in sales although it did claim this would make demand more predictable in the second quarter.
“I am pleased with our relative performance,” said Nokia chief executive officer Olli-Pekka Kallasvuo. “Challenging industry conditions will continue in Q2; however, the vast majority of the channel inventory destocking appears to be behind us. This should lower industry volatility compared to the past two quarters.
“While certain regions may be showing signs of stabilisation, the global economy as a whole remains weak, and we are planning our business accordingly.”
Despite the volatility in the market Nokia remained upbeat claiming an increase in market share of the smartphone segment thanks to shipments of over 3 million 5800 handsets. Analysts also responded well to the results, which exceeded some expectations.
“Nokia’s sales came in slightly higher than our expectation which was between $89 and $91 million,” said Gartner principal analyst Carolina Milanesi. “As expected the 5800 was an important driver in the smartphone category.
“Although the market remained very challenging the good news today is that it is showing some signs that it is stabilising. This is confirmed by the fact that Nokia did not change its outlook for the year of a drop of 10 per cent.
“The bottom line is that although sales were a bit better than anticipated the strain on the market is clearly seen in the financial results with an average selling price that dropped $6 quarter on quarter.”
In Europe mobile device volume dropped 13 per cent year on year from 25.7 million to 22.3 million devices, with only the North American market seeing a rise, with volumes going from 2.6 to 3.4 million devices.