Nokia warns of difficult start to 2011

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Profits slide once more at Nokia as it warns of a tough start to this year, with recently appointed chief executive Stephen Elop claiming Nokia will change faster than the industry

Nokia has warned it may struggle at the start of 2011 after seeing profits fall in the final three months of 2010.

The handset manufacturer saw operating profits fall 26 per cent to just over €1 billion (£860 million) compared to a year earlier, but sales were up six per cent year-on-year and 23 per cent sequentially to €12.7 billion.

Nokia shipped 123.7 million mobile devices in the quarter, down three per cent year-on-year and up 12 per cent compared to the previous quarter. It shipped 28.3 million smartphones in the three months, which was a 36 per cent increase compared to a year earlier and seven per cent sequentially.

Average selling price stood at €69 in Q4 2010, up from €64 in the same quarter last year and €65 in Q3 2010.

Nokia’s market share decreased to 32 per cent last year, compared to 34 per cent in 2009. It’s smartphone share also fell in the quarter to 31 per cent compared to 38 per cent in the previous quarter.

The Finnish handset manufacturer also warned that operating margins would fall to between seven and 10 per cent in Q1 2011, down from 11.3 per cent in the final three months of last year.

Nokia chief executive Stephen Elop said: “In Q4 we delivered solid performance across all three of our businesses, and generated outstanding cash flow. Additionally, growth trends in the mobile devices market continue to be encouraging. Yet, Nokia faces some significant challenges in our competitiveness and our execution. In short, the industry changed, and now it’s time for Nokia to change faster.”

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