AP
Nokia's 2Q Net Profit More Than Doubles
Thursday August 2, 7:25 am ET
Nokia Reports Strong 2Q Net Profit of $3.8 Billion on Strong Sales

HELSINKI, Finland (AP) -- Nokia Corp., the world's largest mobile phone maker, said Thursday that second-quarter earnings more than doubled to euro2.8 billion ($3.8 billion) on strong sales and that it had further increased its market share. Its shares rose 7 percent.

Net profit for the April-June period came to euro2.82 billion ($3.85 billion), up from euro1.14 billion in the second quarter last year, the Finnish company said. Sales rose 28 percent to euro12.6 billion ($17.22 billion) from euro9.8 billion in the year-ago period, Nokia said.

The company said it had increased its global market share to 38 percent from 34 percent in the same quarter in 2006 and from 36 percent in the first quarter. It sold 100 million mobile devices in the period, an increase of 29 percent on 2006.

Nokia's result beat expectations, with its shares surging 7 percent in Helsinki to euro22.05 ($30.13). Before the earnings announcement, the company's stock had been up some 2 percent in anticipation of a good second-quarter performance.

"Nokia continued to grow in the second quarter thanks to an excellent performance from our device businesses," CEO Olli-Pekka Kallasvuo said. "Nokia's share of the global device market improved to an estimated 38 percent while operating margins in our device businesses were at their highest level in three years."

The company said it expects the overall global handset market to grow "by 10 percent or more" on its 2006 estimate of 978 million units, up from its previous forecast of "up to 10 percent more." It also said it expects its own market share to increase from the second quarter, but gave no estimate.

"Nokia took us all by surprise. We expected a strong result but not this strong," said Jussi Hyoty, chief analyst at FIM Securities. "Nokia is back to doing everything well, as it used to."

The company said that particularly its high-end models -- the Nokia 6300, N95 and E65 -- had shown an "excellent performance," beating expectations.

"Nokia now has some major hit products across what is already the industry's broadest product portfolio," Kallasvuo said. "I am particularly encouraged by the success of a number of recently launched higher-end devices, which made a strong contribution to increased profitability."

But the group again cautioned about the performance of its troubled network operations, describing market conditions as challenging due to heavy competition. Nokia Siemens Networks, which started operations in April, showed a net loss of euro1.1 billion ($1.5 billion). Nokia said the result was not directly comparable to the performances of the network operations of Nokia and the German giant, Siemens, in the same quarter in 2006.

The two companies formed the joint venture to produce equipment that service providers need to be able to supply subscribers with faster and larger transfers of data and mobile content. On Thursday, Nokia revised its estimate of savings the merger would allow, saying it expects annual cost cuts of some euro1.5 billion ($2.1 billion) by the end of next year rather than 2010, as it had earlier predicted.

Nokia, based in Espoo near the Finnish capital, has sales in 130 countries. Because of the network merger with Siemens, the company now employs 110,000 people -- up from 68,000 a year earlier.

Nokia: http://www.nokia.com