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Nokia reports massive drop in profits

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.

Finnish mobile giant Nokia is continuing to suffer at the hands of the slowing global economy with an astounding drop in net profits.

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.

23 Comments

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Bauul 17th April 2009, 11:13 Quote
Or... you could release more than (oh I dunno) one new proper handset in the last 12 months.
antiHero 17th April 2009, 11:20 Quote
What do you mean? There have been atleast 4 good ones in the last 12 month plus a couple of great mid range handsets. The 5800 "Tube" was a great success but in an economical crisis people just dont buy 600€ phones.
I would like to see how the other big companys in the market are doing in comparistment (sp?)
[USRF]Obiwan 17th April 2009, 11:27 Quote
Or... you could release just one perfectly working version every 12 months ;)
ch424 17th April 2009, 11:36 Quote
How do their profits compare to samsung and sony then? If the market share is the same, you'd expect the other big two to be down as well.
Nictron 17th April 2009, 11:36 Quote
I think Nokia has some issues, if I look at our company very few new people buy Nokia's, it is mostly Samsung. Somehow people see Nokia for the older Directors and the young crowd snuff at Nokia.

I think they need brand repositioning!
wuyanxu 17th April 2009, 11:59 Quote
i know Nokia from the N series multi-functioning phones and their cheap yet unbreakable phones.

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.
Fod 17th April 2009, 12:02 Quote
you could say that apple flipped it over and hit its weak spot for massive damage.
Quote:
Originally Posted by wuyanxu
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.
that is, if multi-function means only ever doing one thing at a time
ch424 17th April 2009, 12:09 Quote
@fod

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...
Fruitloaf 17th April 2009, 12:22 Quote
"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."

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.
lewchenko 17th April 2009, 13:19 Quote
Nokia really lost their way about 1.5yrs ago.

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.
wuyanxu 17th April 2009, 13:19 Quote
Quote:
Originally Posted by Fod

that is, if multi-function means only ever doing one thing at a time

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)
ComputerKing 17th April 2009, 13:34 Quote
How ? Here in UAE people still buy nokia with crazy numbers, Change their phone .. And All nokia here is MADE IN CHINA now.... so they are cheaper to make from Finland ones.

I agree that people buy less now but not like 90 percent drop.. Impossible
Bauul 17th April 2009, 13:50 Quote
Ok ok, some actual Nokia facts:

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.
Fod 17th April 2009, 13:52 Quote
Quote:
Originally Posted by wuyanxu
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)

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.
Almightyrastus 17th April 2009, 14:01 Quote
I also think that part of the problem from a UK standpoint is the steady move over to 18 and 24 month contracts rather than the 12 month standard they used to be. All meaning that people are not changing their phones as often now.
wuyanxu 17th April 2009, 14:03 Quote
Quote:
Originally Posted by Fod
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.
that's true. and it's why i push jailbreak in almost all my iphone related posts. there's no reason not to!

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.
Fod 17th April 2009, 14:08 Quote
it's not OS 3 i'm worried about - it's the next iphone. the ipod touch 2g was jailbroken a long time ago but the actual code was held back in the hope that the hardware vuln would go unfixed in the next iphone release. some guy got hold of it and started selling it, which made the dev team decide to release it to stop the idiot from making any money off their work. HOPEFULLY the iphone 3G hardware design was locked in before this, but you never know. here's hoping!
alleyne 17th April 2009, 14:23 Quote
The last Nokia i had, a N73 was terrible. it sometimes took 10 seconds to get into a message in my inbox. It was always slow and lagging and the camara decided itself wether it wanted to save the picture i took or not. its the same story with my dads nokia.

I now have a samsung, which is good, not great but is fast and works.
________
MERCEDES-BENZ M113 ENGINE
evanbraakensiek 17th April 2009, 14:38 Quote
I wonder if Nokia's purchase of Symbian last year is having an adverse effect on their profits: "[t]otal cash outlay for the move will run Nokia roughly €264 million -- about $410 million". Though, a drop in profits is indicative of the market in general.
Bauul 17th April 2009, 14:58 Quote
Quote:
Originally Posted by Almightyrastus
I also think that part of the problem from a UK standpoint is the steady move over to 18 and 24 month contracts rather than the 12 month standard they used to be. All meaning that people are not changing their phones as often now.

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)
lewchenko 17th April 2009, 15:03 Quote
I echo the comment about the contract phone market. To get an affordable tariff in UK you need to sign up to a contract of either 18 months or 24 months which makes the initial outlay of the phone affordable... otherwise you hundreds for the phone, and a lot each month for very little. The networks have us over a barrel !

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.
Boswell 17th April 2009, 15:54 Quote
At least they made a profit!
Oclocker 19th April 2009, 01:23 Quote
Quote:
Originally Posted by Fruitloaf
"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."

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.

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!
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