Nokia reports massive drop in profits
Nokia's year-on-year profits for the first quarter are down 90 percent as the slowing global economy takes its toll.
As reported by CNet, the company saw its net profits drop for the first quarter of this year by a staggering 90 percent – far below analyst and investor expectations.
Although the company was still able to turn a profit of €122 million – which at first glance sounds cheering – this contrasts markedly with the figure for the same quarter last year, which was a far healthier €1.22 billion. The massive dip is worse than industry analysts had feared, with earlier predictions putting this quarter's profits at €306 million.
The main blame for the dip – which was accounted for by higher costs and a 19 percent year-on-year drop in handset sales – is placed firmly on the poor economy. Chief executive Olli-Pekka Kallasvuo said that “extensive destocking by operators and distributors [...] adversely impacted our sales volumes in the quarter.” A drop in average handset price from €71 to €65 also impacted earnings.
The good news for Nokia is that the worst could be over: with the company managing to hold on to its 37 percent market share despite slowing sales, things should start looking up soon. The company is also hoping that a predicted 10 percent drop in sales in 2009 will mostly be concentrated in the first half of the year, with things starting to look up later on.
While Nokia might be hurting from the sudden year-on-year dip, it's far from alone in the tech industry: even Google, with its seeming licence to print money, is feeling the sting with TechCrunch reporting that the company has shown a 3 percent dip in revenue for the first time in history.
Do you believe that Nokia needs to innovate its way out of the financial doldrums with a high-end iPhone killer, or should the company concentrate on recession-friendly low-end handsets? Share your thoughts over in the forums.
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Discuss in the forums ReplyI would like to see how the other big companys in the market are doing in comparistment (sp?)
I think they need brand repositioning!
on the cheap end, the drop is probably due to people holding on to their handset and now wanting to change.
on the multi-functioning phones, although their spec are great, the operating system sucks. they really can't compete with the iPhone in terms of multi-functions.
Yeah, Nokia's S60 phones have real multitasking, an alt-tab equivalent and copy+paste, which most people don't know about because Nokia don't advertise them or mention them in the manual...
Funny thing is I have a Nokia E71 and think the exact same thing about the iPhone. Sure its a pretty looking interface but its missing so much, no multi tasking, no multimedia messages, bluetooth so restricted it reminds me of a phone I had 10 years ago (where's my A2DP and tethering to a PC). Different horses for different courses but I prefer my phones to be able to run whatever I like without having to get Apples approval and I want my programs to be allowed full access to the hardware to.
They started releasing phones which a) all looked identical b) had the most stupid obscure buttons you could ever imagine which were unusable. c) the OS had not really changed at all... my previous Nokia e65 phone's OS was identical to their latest models.
I remember when I bought my samsung instead of the nokia's on offer. (Wish I hadnt now because it really is a piece of sh**) but I compared it with the best Nokia at the time... The N78 I think it was called. The Nokia's keypad was unusable ... small long bars for buttons .. what use was that ? The only other Nokia they had which was half decent was the N95b, and it was a brick. Looked like one, and weighed like one. No thanks.
I went for the Samsung which had a 5MP camera and touch screen section (turns out that the camera is useless in the real world), and a decent OS (turns out that the OS is so non configurable and restrictive that it annoys the hell out of me).
In summary, they just didnt innovate that well and hardly put out many decent phones. Plenty of us were sucked into the much better looking Samsung ranges at the time. (A decision Ive regretted ever since).
I wish I could say that my next phone would be a Nokia as well, but both me and the wife will be getting iPhones this summer, so its a mute point now. One thing is for certain.. I will never own a Samsung phone again.
correct, surely it means thousands of apps that cater to whatever you have in mind. (including bluetooth file transfer, tethering, copy and paste on jailbroken iphones)
i got to say, all your comments about none-jailbroken iphones are correct, it'sa piece of junk. i'd much prefer an Andriod phone over it. but once jailbroken, it's free and does almost all Mac OSX can do. (including having a terminal and multiple background apps)
I agree that people buy less now but not like 90 percent drop.. Impossible
1) They have only released two phones in the last 12 months that had any kind of major impact (in the UK at least): the N96 and the 5800 Xpressmusic.
2) They are being raped on all sides by the competition: Apple, Rim, Samsung (especially Samsung), Sony Ericsson and even LG are biting into Nokia's market share.
3) They're just not the fashionable brand they once were.
Unfortunately for Nokia, they just don't have a particularly strong angle into the market, which is why Samsung are now bigger in the UK than Nokia are.
well yeah, jailbroken, they're awesome bits of kit. however, the number of users with jailbroken devices will surely be less than 1%; so all any criticism about the iphone has to refer to the device as it is used by the vast majority of owners. OS 3.0 will go some way to remedying the situation, and the next iphone will probably be my next phone (i have an n95 8gb and an ipod touch right now and would love to consolidate the two; weighed up i am happy to live with the limitations of the OS, assuming a jailbreak is released), but you have to consider a jailbroken iphone as a seperate device entirely.
also, iPhone OS 3.0 is said to be already jailbroken on existing devices. because the exploit are hardware based code insertion. so personally i'll wait until June 2009's rumoured new iphone to be jailbroken then buy it :) until then, i'll keep my jailbroken iPhone with OS 3.0.
I now have a samsung, which is good, not great but is fast and works.
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That's actually not true, the market is polarising across 12 and 24 month contracts (which a whole bunch of 1 month coming in as well)
Pay as you go phones are always 12months out of date anyway, thus pushing you towards the contract market, and also tend to be expensive.
The contract length is the only reason I have been forced to hold onto my piece of crap Samsung for so long.
So perhaps the phone companies need to be lobbying the networks or even bypassing them somehow.
I also have a an E71 and its carp first nokia I've owned ever & last. it says i'm doing 4mph (or 3 or 6)(in open and stood still) pile of dog droppings - 3 say its acceptable due to sat navs accepted innaccuracy's (untrue) - nokia won't be missed by me if they end up a dead dinosaur!