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Nokia Phone Sales Drop 13% In Q3

10/14/2004 08:38:00 AM Eastern

Helsinki, Finland — With U.S. mobile phone market share declining in the third quarter and volume sliding “significantly” in North America, overall mobile phone sales at Nokia slipped 13 percent, dropping to $5.5 billion from $6.3 billion in the same three months in 2003.

Nokia said its third-quarter market mix “was more weighted toward low-penetration markets, where entry-level phones predominate.” The company’s midrange volumes increased, but it said this was not enough to counterbalance the impact of the low-penetration markets.

Operating profit for mobile phones plunged 44 percent in the third quarter, down to $1 billion from a year-on-year $1.8 billion. Operating margin was reduced to 18.6 percent, compared with a year-earlier 28.8 percent, as operating profit and margin continued to be impacted by lower pricing.

Shipments of Nokia mobile phones hit 51.4 million units in the third quarter, with the company beginning shipments of six models and the launching of three new models. Globally, Nokia reported phone total market shipments of 158 million units, as this number continued to grow in the third quarter. Total global 2004 volume is expected to reach about 630 million units.

Lower phone sales in the third quarter resulted in overall flat sales at Nokia, with three-month totals rising just 1 percent, to $8.57 billion from $8.49 billion in the same quarter a year earlier.

Nokia operating profit in the third quarter dropped 20 percent, down to $1.1 billion from $1.4 billion in the year-ago period, while overall company margin came in at 13.4 percent, compared with 16.8 percent the previous year.

Nokia net income also decreased 20 percent in the third quarter, down to $814.9 million from $1 billion in the same three months in 2003.

For the nine months, mobile phone sales were off 14 percent to $15.9 billion from $18.4 billion, while nine-month mobile phone operating income slid 36 percent to $3.3 billion from $5.2 billion.

Consolidated Nokia nine-month sales dipped 2 percent to $25 billion from $25.5 billion. Operating profit was off 11 percent to $3.7 billion from $4.1 billion, while net income dropped 10 percent to $2.7 billion from $3 billion.