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Nokia Mobile Phone Sales Soar 20%, N.A. Slides

Helsinki, Finland — Although sales of mobile phones in North America declined significantly in the second quarter, Nokia still registered a 20 percent increase in mobile phones segment sales, hitting $5.9 billion, up from a year-ago $4.9 billion.

Shipments of mobile devices in North America declined to 6 million units in the second three months, ended June 30, down 22 percent from 7.7 million units shipped in the same three months in 2004. The market was scarred by a “continuing challenging, competitive environment” for Nokia, said the company.

Nokia’s mobile phones segment recorded a 2 percent decrease in operating profit in the second quarter, sliding to $958.9 million from a year-earlier $974.7 million. Operating margin dipped to 16.2 percent from a year-on-year 19.8 percent, with second quarter profitability affected by continued pricing pressure and a higher proportion of lower priced entry-level phone sales, driven by stronger demand in emerging markets. Average phone selling price in the second three months dropped to $128 from a year-ago $131.

Worldwide industry shipments should reach 760 million mobile phones in 2005, according to Nokia, with growth coming predominantly from emerging markets where low-end products dominate and pricing pressures are intense.

In smartphones, Nokia said total industry shipments reached about 12 million units, up from 3.5 million year-over-year. Nokia’s smartphone volume climbed to 6.7 million units in the three months, up from 2.1 million in the second quarter of last year.

For the six months, mobile phones segment sales jumped 16 percent, reaching $11.4 billion, up from $9.9 billion in the same period the prior year. Operating profit for the first half was off 9 percent, sliding to $2 billion, from $2.2 billion. Consolidated Nokia sales in the second quarter jumped 25 percent to $9.8 billion, from $7.9 billion in the second three months of 2004. Operating profit rose 13 percent to $1.2 billion, from $1.1 billion, while net income increased 15 percent, hitting $971 million, compared with a year-ago $844.6 million.

In the first half, Nokia consolidated sales were up 21 percent, reaching $18.8 billion from a year-on-year $15.6 billion. Operating profit increased 11 percent to $2.6 billion, from $2.3 billion, while net income rose 17 percent to $2 billion from a year-earlier $1.7 billion.