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Nokia Q2 Profit Plunges; CEO Under Fire

Helsinki, Finland
– Nokia reported a steep 40 percent decline in net profit in the second
quarter, to 227 million euros, down from 380 million euros in the same period
last year.

Revenue rose less
than 1 percent to 10 billion euros from 9.91 billion euros, while operating
profit fell to 295 million euros from 427 million euros, and the company’s
overall market share fell to 33 percent in the quarter, down from 35 percent a
year earlier.

The company cited
a slight 3 percent net sales increase in its devices and services unit,
resulting primarily from higher volumes and offset by falling average selling
prices on it handsets and mobile computing devices. Operating profit for the
devices and services division decreased 16 percent to 643 million euros,
compared with 763 million euros in the second quarter 2009.

Nokia said net
sales “were adversely impacted by the competitive environment, particularly in
the high end of the smartphone market,” presumably from Apple’s iPhone and
Google’s Android phones.

The results may not
bode well for Nokia CEO Olli-Pekka Kallasvuo. Several news outlets, including
the Wall Street Journal and Reuters, reported this week that Nokia’s board is
considering replacing Kallasvuo, and Kallasvuo responded on CNBC Thursday
morning, urging an end to the media speculation.

“There has
been a lot of speculation on my position, on myself, during the last couple of
weeks and that is not good for Nokia and must be brought to an end one way or
another,” Kallasvuo said. “I’m not in a position here and now to really
shed any more light on the topic. I really must just concentrate now on the
task at hand,” he added.

The company said
in its earnings report that it “will deliver a family of smartphones based
on the Symbian^3 software platform that is targeted to offer a clearly improved
user experience, a high standard of quality, and competitive value to
consumers. We plan to start shipping the Nokia N8, the first Symbian^3 device,
towards the end of the third quarter 2010. The Nokia N8 will be followed soon thereafter
by further Symbian^3 smartphones that will give the platform broader appeal and

addressed the topic during a conference call with analysts, touting the
company’s first Symbian phone. “We are approaching the end of this painful product
transition at the high end of our product portfolio,” he said. “The N8 will
mark the beginning of our renewal. As we go forward I believe we will regain
high-end leadership in our industry.”