Nokia suffers $1.36-billion loss Q3 2009; sales worldwide slip by 20%

Wednesday, October 21, 2009, 15:25 by Tech Correspondent

Nokia, the biggest maker of mobile-phone sets in the world, has reported a loss of $1.36 billion in the third quarter of 2009.

This loss is in contrast to the company’s profit of $1.63 billion in the same quarter a year before.

Nokia Aeon phone photo

Nokia Aeon phone photo

In a statement, Nokia, based in Finland, also said it has written down the value of its wireless networks operations by $1.35 billion and that the sales worldwide dropped by as much as 20%.

Nokia said it is still remains the world’s largest company manufacturing mobile phones, with the market share unchanged at 38%.

However, the company admitted that its lead in smartphones – which is the segment of the mobile-phone market that is growing the fastest – has slipped to 35%  from 41%, coming behind iPhone, of Apple, and BlackBerry devices, of Research in Motion.

According to industry analysts, Nokia was being adversely affected by the worldwide economic depression, its weak portfolio of smartphones, as well as fierce competition in the field.

One analyst was quoted by the media as commenting that both Research in Motion’s Blackberry business phones and Apple’s iPhones have unmistakably started eating into Nokia’s lead in the smartphone segment. Nokia is currently approaching the launch of its biggest play in the touch screen, smartphone segment so far with the upcoming Nokia N900 Maemo phone.

In the statement, Nokia said that the average sale price for one of its mobile-phone sets plunged by 14% to $92 from $107 a year ago.

Over all, sales of Nokia decreased to $14.5 billion in the third quarter of 2009, from $18.1 billion a year ago, mainly because of the drop in sales – ranging from 25% to 31% – in North America, Latin America, the Asia-Pacific region and Middle East-Africa region.

Nokia’s operating margin for the mobile phones – which is essentially its pre-tax profits – went down in the third quarter of 2009 to 11.4% from 12.2% in the second quarter of 2009, and from 18.6% in 2008.

The company shipped 108.5 million mobile-phone sets in the third quarter of 2009 – down by 8% year-on-year, but up by 5% on the amount shipped in the second quarter of 2009.

Of the total devices shipped in the third quarter of 2009, Nokia Nseries phones comprised 4.5 million, and Nokia Eseries devices constituted 4.4 million – which is slightly down from the combined 9.3 million sets that were shipped in the second quarter of 2009.

Olli-Pekka Kallasvuo, the chief executive Nokia, explained in the statement that the company had in fact sold more mobile-phone sets in the third quarter of 2009 than in the second quarter of 2009 and that the “continuing problems” at Nokia Siemens Networks (the wireless-network joint venture with Siemens, of Germany) were an outcome of “the challenging competitive factors as well as market conditions.”

The company, Kallasvuo added, continues to support the efforts being done by the Nokia Siemens Networks to better its performance.

The write-down at Nokia Siemens Networks – which was founded in April 2007 – drove the joint venture to an operating loss amounting to $1.6 billion in the third quarter of 2009, in comparison to an operating loss of $1.4 million in 2008.

In the meantime, Sony Ericsson, too, registered negative financial results for the third quarter that ended on September 30, 2009, with the number of units shipped going down to 14.1 million sets, from 25.7 million devices a year earlier.

Sony Ericsson’s revenues declined by 42 % from euro 2.8 billion to euro 1.6 billion in the third quarter.

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