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Nokia profit surges 85% on new models

Nokia profit surges 85% on new models
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First Published: Thu, Oct 18 2007. 11 15 PM IST
Updated: Thu, Oct 18 2007. 11 15 PM IST
Nokia Oyj, the world’s biggest maker of mobile phones, said third quarter profit surged 85%, beating analysts’ estimates, as new models won customers from rival Motorola Inc.
Nokia shares rose as much as 7.5%, the most in two months. Net income increased to €1.56 billion (Rs8,700) from €845 million a year earlier. Sales rose 28% to €12.9 billion, Espoo, Finland-based Nokia said on Thurday.
Chief executive Olli-Pekka Kallasvuo said sales of the €550 N95 multimedia phone and handsets costing less than €30 helped Nokia increase its market share to 39% and boost margins. Nokia has made acquisitions to spur growth from Internet content, taking on Apple Inc. and TomTom NV.
“The profitability of their basic phones is at an amazing level,” said Jussi Hyoety, head of research at Glitnir Bank in Helsinki. “Their distribution, scale and efficiency makes it extremely profitable for them.”
The company, which has the widest range of handsets in the market, was expected to post net income of €1.33 billion on sales of €13.2 billion, based on 20 analysts’ estimates compiled by Bloomberg.
The Finnish company shipped 112 million devices in the quarter, an increase of 11% sequentially and 26% from a year earlier.
The average selling price for its phones slipped 8.9% to €82 as the proportion of handsets costing less than €30 rose “significantly,” Nokia said.
Nokia said it had 39% of the market in the quarter, a gain from 36% a year earlier. Nokia forecast its market share in the fourth quarter will match that of the previous three months.
Operating profit was 14.4% of sales in the quarter, up from 10.9% a year earlier.
Nokia forecast about 1.1 billion handsets will be sold globally this year, up from 978 million units in 2006. It had previously predicted growth of 10% or more.
Unit sales jumped 37% in China and 41% in the Asia-Pacific region, which includes India, from a year earlier. Unit sales in Europe rose 17% from a year earlier.
North American sales fell 1.7% from a year earlier, though jumped 39% from the second quarter.
Maria Fredriksson, Jakob Lindstroem and Benedikt Kammel in Stockholm contributed to this story.
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First Published: Thu, Oct 18 2007. 11 15 PM IST