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Nokia Cellphone Sales Drop 15%

Helsinki, Finland — Despite higher unit volume of mobile phones, first quarter dollar sales at Nokia dropped 15 percent, down to $5.1 billion from $6 billion in the year-ago period. Sales to North America were flat in the year’s opening three months.

Mobile phone operating profit decreased 25 percent in the first quarter, sliding to $1.3 billion from $1.7 billion in the same three months last year. Operating margin for the mobile phone segment decreased to 25.6 percent in the first quarter, down from 29 percent year-on-year, primarily impacted by lower sales.

In what Nokia calls a “clearly vibrant” mobile device industry that continued to grow at 29 percent in the first quarter, Nokia notched only a 19 percent growth percentage, or 44.7 million units shipped, reflecting that the company was “not able to fully exploit the usual seasonal market pick-up in March.” The company’s long-term mobile devices market share target remains unchanged at 40 percent, up from the 35 percent share reported in the first quarter, said Nokia

As a result, Nokia said, “sales for the quarter did not meet our expectations,” and the company continued to be pessimistic about second quarter Nokia net sales, which it expected to be flat or slightly below the $8.4 billion recorded in the second three months of 2003.

Despite the down period for sales of mobile phones, Nokia claimed overall “good, solid profitability” as it managed its costs. Consolidated first quarter sales hit $7.9 billion, down 2 percent from the $8.1 billion reported year-on-year. Operating profit dropped 17 percent to $1.4 billion from $1.7 billion.

Nokia believes mobile phone sales and margin should benefit toward the end of 2004, due to new products launched during the year.