Nokia Q2 Profit Plunges; CEO Under Fire

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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 reach."

Kallasvuo 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."


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