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IPhone, BlackBerry force Nokia to trim forecast for market share

IPhone, BlackBerry force Nokia to trim forecast for market share
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First Published: Fri, Jul 17 2009. 01 10 AM IST

On backfoot: A file photo of Rick Simonson. He says Nokia intends to focus on getting the most value out of each sale. Daniel Barry / Bloomberg
On backfoot: A file photo of Rick Simonson. He says Nokia intends to focus on getting the most value out of each sale. Daniel Barry / Bloomberg
Updated: Fri, Jul 17 2009. 01 10 AM IST
Helsinki: Mobile phone company Nokia Oyj dropped as much as 10% in Helsinki trading after competition from the iPhone and BlackBerry forced the world’s biggest maker of mobile phones to reduce forecasts for market share and profitability.
The market share will be little changed this year, compared with a previous forecast of an increase, Nokia said in a statement on Thursday.
The operating margin in the main division will be little changed in the second half from the first, when it was 11.3%.
The Espoo, Finland-based company earlier predicted the margin would be in the teens.
On backfoot: A file photo of Rick Simonson. He says Nokia intends to focus on getting the most value out of each sale. Daniel Barry / Bloomberg
Nokia still anticipates the global handset market will shrink about 10% in 2009 because of weaker economies and consumer spending.
Nokia has encountered more competition in high-end phones, where Apple Inc.’s iPhone and Research In Motion Inc.’s BlackBerry models have attracted buyers.
“It takes a while to turn around handset portfolios and they are struggling at the moment particularly to get their high-end product correct,” said an investment manager at Henderson Global Investors Ltd in Edinburgh, Stuart O’Gorman, who oversees $1.2 billion (Rs58.44 crore) in technology stocks including Nokia.
At some stage Nokia can pull itself out, but it may take longer than people are hoping for.
The company’s shares dropped as much as €1.13 to €9.97 in Helsinki.
The stock traded at €10.09 at 2.38pm. Before Thursday, the stock was unchanged this year, giving the company a market value of €41.6 billion ($58.7 billion).
The second-half non-IFRS (International Financial Reporting Standards) operating margin in the main devices and services unit will be at about the same level as in the first half, Nokia said.
Second-quarter net income fell to €380 million, or 10 cents a share, from €1.1 billion, or 29 cents, a year earlier.
Sales slid 25% to €9.9 billion. Analysts predicted profit of €361 million on sales of €10.1 billion, according to the average estimates in a Bloomberg survey.
The Finnish company shipped 103.2 million phones in the quarter at an average price of €62, down from €74 a year earlier.
The drop in average selling prices was primarily due to general price pressure and a higher proportion of sales of lower priced products, Nokia said.
Nokia estimates its mobile device market share in the second quarter was 38%, down from 40% a year earlier and up from 37% in the first quarter.
The company said it lost market share in Latin America, the Asia-Pacific region and North America from a year earlier.
“We think the share is going to be about constant in the next quarter, but even more than that, we’re going to focus on getting the most value out of every one of those sales,” chief financial officer, Rick Simonson said in a Bloomberg Television interview on Thursday.
Sony Ericsson Mobile Communications Ltd, the world’s fifth largest handset maker, on Thursday reported a 43% drop in unit shipments from a year earlier and posted its fourth straight quarterly loss.
Competition remains intense, but demand in the overall mobile device market appears to be bottoming out, chief executive officer Olli-Pekka Kallasvuo said in the statement.
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First Published: Fri, Jul 17 2009. 01 10 AM IST