Nokia Posts Third-Quarter Loss of 559 Million Euros (Correct)
Oct. 15 (Bloomberg) — Nokia Oyj, the world’s biggest maker of mobile phones, had its first net loss since the company began reporting quarterly in 1996, hurt by costs related to a joint venture with Siemens AG and on weaker demand.
The company reported a net loss of 559 million euros ($834 million), from a profit of 1.09 billion euros in the year- earlier period. Sales declined to 9.8 billion euros. Analysts in Bloomberg surveys had expected on average a profit of 367 million euros and sales of 10.03 billion euros.
The Espoo, Finland-based company took a goodwill writedown of 908 million euros on its Nokia Siemens Networks venture. Nokia said its handset market share was unchanged at 38 percent and will stay at that level in the fourth quarter, while smart- phone sales fell. Nokia’s N97 smart phones are being stacked up against Apple’s iPhone, which has access to the biggest collection of downloadable software and media.
“It’s not a great report,” said Ben Rogoff, who helps manage about $2 billion including Nokia shares at Polar Capital Technology Trust Plc in London. “With Apple set to increase its presence in Europe and the N97 going into the channels, it was a good chance for them to really show what they could do, and the bottom line is they didn’t, and there was a revenue miss.”
Nokia fell as much as 75 cents, or 7.3 percent, to 9.55 euros, and was trading at 9.61 euros at 1:45 p.m. in Helsinki. That gave the company a market value of 35.9 billion euros. Before today, the stock had dropped 7.2 percent this year.
Nokia Siemens
Nokia Siemens Networks, which is consolidated in Nokia’s results, booked operating losses of more than 1.6 billion euros over 2007 and 2008 as it struggled against carrier spending cuts and competition from new entrants in the network equipment business.
“The recoverability of the investment in Nokia Siemens Networks has declined as a result of the decline in forecast profits and cash flows,” the company said in the statement.
Nokia said it will stick with the venture.
“We continue to support Nokia Siemens Networks actions to improve its performance,” Chief Executive Officer Olli-Pekka Kallasvuo said in the statement.
The company said adjusted operating margin at its Devices & Services unit is expected to rise one percentage point or more in the fourth quarter compared to the same period a year before. The margin was 11.4 percent in the third quarter the company said, contracting from 18.6 percent a year earlier.
Smart-phone Sales
Kallasvuo raised his guidance on industry shipments, saying they will fall 7 percent this year. The previous forecast was for a 10 percent decline. Nokia’s adjusted operating margin for devices will increase sequentially by at least one percentage point in the fourth quarter, the company said.
The company sold 16.4 million smart phones, it said. Last quarter’s smart-phone sales were 16.9 million.
Sales of the N series multimedia phones were 4.5 million in the quarter, the company said, less than the 4.6 million reported last quarter. Nokia sold 4.4 million of the E series, consisting of business-oriented models that compete with Research in Motion Ltd.’s Blackberry, compared to 4.7 million reported last quarter.
Nokia unveiled a scaled down version of the N97 touchscreen device in the quarter as it readied the N900, its first phone using a new software platform.
To contact the reporter on this story: Diana ben-Aaron in Helsinki at dbenaaron1@bloomberg.net