Nokia to ‘reassess’ role and approach

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Nokia to ‘reassess’ role and approach to mobile industry according to new CEO; records increase in profitability during Q3

Nokia must reassess its role and approach to the mobile industry according to new chief executive officer Stephen Elop (pictured), commenting in the wake of the company’s first results under his leadership.

During Q3 2010, operating profit increased from a loss of €426 million in the year-ago period to €403 million, also up from the €295 million recorded in Q2 2010.

The main reason for the increase was a substantial improvement in the profitability of Nokia Siemens Networks year-on-year, although sequentially this segment’s results worsened.

Non-IFRS operating profit decreased to €634 million, compared with €741 million in Q3 2009 and €660 million in Q2 2010

For devices and services, operating profit rose from €785 million and €643 million, in the year-ago and last quarter periods respectively, to €807 million this quarter.

This was aided by an improvement in net sales, which reached €7.2 billion for the segment during Q3. This was an increase of four per cent on Q3 2009 and six per cent on Q2 2010.

On a breakdown, net sales of smartphones and mobile computing devices, referred to as converged mobile devices by Nokia, led the way, increasing sales by 16 per cent year-on-year and five per cent quarter-on-quarter.

Mobile phone net sales, those of series 30 and series 40-based devices, fell six per cent year-on-year, although increased six per cent sequentially.

In volume terms, Nokia shipped slightly more devices year-on-year, up two per cent to 110.4 million, although fractionally less devices sequentially.

The volume of converged devices increased 61 per cent over the year, and up 10 per cent on the last quarter, although mobile phone volumes were down nine per cent and four per cent respectively.

Nokia said overall industry mobile device volumes were 364 million units, representing an increase of 14 year-on-year and eight per cent sequentially. This means Nokia’s preliminary estimated mobile device market share was 30 per cent in Q3 2010, down from 34 per cent in Q3 2009 and 33 per cent in Q2 2010.

Converged mobile device industry volumes in Q3 2010 increased to 70.4 million units, based on Nokia’s preliminary estimate, representing an increase of 57 per cent year-on-year and 19 per cent sequentially. Nokia’s preliminary estimated share of the converged mobile device market was 38 per cent in Q3 2010, compared with an estimated 37 per cent year-on-year and 1 per cent quarter-on-quarter.

Overall, net sales totalled €10.3 billion, also up on the year-ago and previous quarter’s figure, five per cent and three per cent respectively.

Q3 saw Nokia commence shipments of its new N8 flagship smartphone, as well as announce a number of other new Symbian devices at its Nokia World conference last month, including the C7, C6 and E7. It also began offering and shipping other devices, such as the C3 and X3 Touch and Type devices, and the E5.

Nokia World took place in the midst of Olli-Pekka Kallasvuo leaving his role as CEO and Elop’s appointment, and saw Niklas Savander, executive vice president of markets, declare: “Nokia is back.”

During the Nokia World keynote speech, Savander said the new range of devices supporting the latest Symbian software would “represent the transition of our mainstream smartphone platform from legacy to leading edge”.

However, Elop was more reserved in his first judgement on Nokia’s position, perhaps mindful of the strong results Apple has reported in recent days.

Elop said: “Our company faces a remarkably disruptive time in the industry, with recent results demonstrating that we must reassess our role in and our approach to this industry.

“Some of our most recent product launches illustrate that we have the talent, the capacity to innovate, and the resources necessary to lead through this period of disruption. We will make both the strategic and operational improvements necessary to ensure that we continue to delight our customers and deliver superior financial results to our shareholders.”

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