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Nokia's profits, sales pushed by Asian phone sales

Posted: 24 Jul 2006 ?? ?Print Version ?Bookmark and Share

Keywords:Nokia? Motorola? Sony Ericsson? Siemens? cellphone?

Second quarter profits at Nokia jumped to $1.4 billion (Euros 1.14 billion), a 43 percent increase on the corresponding quarter last year, mainly on the back of significantly better sales in emerging markets such as China and India.

Sales hit Euros 9.8 billion ($12.3 billion), up 22 percent from the second quarter 2005. The Finnish group says it took a 34 percent share of the global market for handsets, down from 35 per cent in the first quarter but up slightly year-on-year.

However, a report from Strategy Analytics just as Nokia reported its results last week (July 20) suggested Nokia maintained its 33 percent share of the market, having sold 78 million units. The report said arch-rival Motorola outperformed it in the second quarter, taking a 22 percent share of the global market, its highest level for nearly a decade.

The total market for the quarter was 235.3 million units, and the market research group is sticking to its forecast of 1 billion units being shipped this year.

Motorola reported Wednesday earnings of $1.38 billion, or 55 cents per share on sales of $10.88 billion, up from $933 million, or 37 cents per share on sales of $8.4 billion in the year-ago quarter. Nokia said its performance during the quarter in China was phenomenal, where sales increased by 58 percent to 11.7 million units, notably of cheaper, no frills models, while other Asia-Pacific sales rose 79 percent to 18.8 million.

According to the report from Strategy Analytics, Samsung holds third spot in global sales, at 11.2 percent, or 26.3 million units, which is down from 13 percent for the corresponding quarter last year, followed by Sony Ericsson (6.7 percent) and LG (6.5 percent).

Nokia forecast mobile device sales in the third quarter 2006 would rise sequentially, although slower than the second quarter 2006 increase. It estimated its market share in the third quarter of the year would be approximately the same.

It said the important average selling price figure in the second quarter was Euros 102, down from Euros 105 in the second quarter of 2005 and from Euros 103 in the first quarter of 2006.

Olli-Pekka Kallasvuo, who took over as CEO last month at Nokia, said, "In the second quarter, Nokia delivered strong year-on-year growth in net sales, operating profit and earnings per share. At an industry level, the markets for both mobile devices and mobile infrastructure continued to show healthy growth."

Since his appointment, Nokia has agreed to combine its networks business with that of Siemens AG. Also last month, the Finnish group abandoned plans to form a joint venture with Japanese electronics vendor Sanyo for the production of CDMA devices. In addition, Nokia announced it would cease CDMA mobile phone production. "Once completed, this restructuring is expected to have a positive impact on Nokia s operating margin," said Kallasvuo.

- John Walko
EE Times

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