Nokia Profits Collapse By 96 Percent, Losing Out On ASP

Things have really gone from bad to worse for mobile handset manufacturers with the global economic recession taking a big bite of the companies’ profits and even the industry leader Nokia has suffered hefty losses in its operating profits during the first quarter that ended on 31 March.

The Finnish handset maker posted a whopping 96 percent drop in its operating profits during the first quarter of the year, as demand for mobile devices has slowed down considerably owing to shaky economic environment.

Nokia announced that its operating profits for the first quarter of the year plunged substantially by 96 percent to €55 million, from €1.5 billion for the same period a year ago. Net profits for the company also plunged to €122 million during the quarter on year-over-year basis, dipped from €1.2 billion in last year.

Furthermore, net sales for the company for the same period also declined notably by 27 percent to €9.3 billion, and its market share also dipped slightly to 37 percent, as against 39 percent registered a year earlier.

The company further announced that it shipped 93.2 million handsets during the period, down by 19 percent from a year earlier.

Commenting upon the results, Olli-Pekka Kallasvuo, chief exec for Nokia, said in a statement, “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”.

Nokia further predicted around 10 percent drop in mobile devices volume this year with the first half of the year would see much sharper decline.

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Our Comments

Figures show that Nokia is still selling loads of handsets - more than 93 million over a quarter. The problem though is that Nokia is not selling the type of mobile phones it would like. As we mentioned before, the smartphone segment is where the money is to be made. In terms of Average Revenue Per User, one Apple iPhone is possibly worth 50 or more entry level Nokia 1200 phones.

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