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April 20, 2009

Nokia Q1 profit plunges 90%

Revenue from Nokia Siemens Networks decreased 12% to $4 billion

By CBR Staff Writer

Nokia has reported a 90% decline in profit to E122m ($161m) for the first quarter 2009, compared to E1.22 billion ($1.61 billion) in the year-ago quarter, on revenue down 27% at E9.27 billion ($12.26 billion). Operating profit fell 96% to E55m ($73m) from E1.53 billion ($2.02 billion) in the same quarter last year.

The company shipped 93.2 million phones, down 19% over last year, while market share in the mobile device market for the quarter was 37% compared to 39% in the same quarter last year. The average selling price declined from E71 ($94) to E65 ($86).

Revenue from Nokia Siemens Networks decreased 12% to E3 billion ($4 billion), while Devices and Services revenue declined 33% to E6.17 billion ($8.16 billion). Diluted EPS fell 91% to E0.03 ($0.04). Revenue fell in Latin America, Middle East and Africa, and Asia Pacific. In North America it was up 21% at E533m ($705m).

During the quarter the company announced plans to cut approximately 1,700 jobs in a bid to counter the decline in demand. It also announced a voluntary resignation initiative to reduce costs and avoid the need for compulsory job losses. In January, it announced plans to shut down its mobile devices R&D site in Jyvaskyla to concentrate on other R&D facilities in Finland in Tampere, Oulu, Salo, and the Helsinki metropolitan area.

Olli Pekka Kallasvuo, chief executive at Nokia, said: In what has been an exceptionally tough environment, we continue to invest in a focused manner in consumer internet services delivered across our broad portfolio of mobile devices. The inventory in the sales channels decreased substantially during Q1 due to extensive destocking by operators and distributors. This adversely impacted our sales volumes in the quarter.

Looking ahead the company said it expects industry mobile device volumes to be up slightly sequentially in the second quarter.

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