Nokia's third quarter sees profits drop

Nokia has released its third-quarter results, showing a significant drop in sales and profits.

According to the results, issued on Thursday, net sales were down five per cent year-on-year. Quarterly profits were down by just over 30 per cent over the same period, ending up at €1.09bn. Operating profits were down 21 per cent year-on-year.

Nokia's global market share dropped slightly, down one per cent from its 39 per cent share in the third quarter of 2007. The Finnish firm's chief executive, however, gave an upbeat take on the situation.

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Olli-Pekka Kallasvuo said: "As a result of our strong operational management and market position, Nokia was able to achieve solid margins and operating cash flow of €1.3bn for the third quarter of 2008. With our scale, brand, improving product portfolio and low cost structure, we believe Nokia is well positioned for the current times."

Nokia has a particularly strong grip on the lower end of the market, and one reason for the drop in profits appears to have been a drop in the average selling price of a Nokia handset. This was €72 in the third quarter of this year, and €74 in the corresponding quarter last year.

The drop in average price was "primarily due to a higher proportion of lower-priced products and the negative impact of the weaker US dollar", according to Nokia's statement. In the third quarter of this year, 310 million units were sold: an eight per cent year-on-year rise.

Nokia's sales of mobile phones saw healthy year-on-year increases in Latin America, the Middle East and Africa, and the Asia-Pacific regions. In Europe, however, unit sales were down 5.5 per cent, and North America saw a drop of 16.7 per cent.

Looking to the future, Nokia said it expected its market share to hold or slightly increase in the fourth quarter of 2008.

The manufacturer's intra-day share price had fallen nearly eight per cent at the time of writing.

Nokia is the first of the major phone manufacturers to announce its Q3 results. Sony Ericsson will announce its results on Friday.

Original article: Nokia profits drop by 30 percent from ZDNet UK