Nokia has reported a 13.2% increase in net income.
Nokia has reported a sharp increase in profitability for Q1 2003. It also forecast stronger sales growth in Q2, based on expectations that the world handset market will increase by 10% over the 405 million units shipped in 2002.
Much of its ambitions are centered on the US market where it aims to take on Motorola in a battle for the CDMA market. Seven new CDMA phones have started shipping, together with GSM models tailored for the US market.
In the first quarter to March 31, net income rose 13.2% to E977 million on revenue 3.4% higher at E6.77 billion. However, the Espoo, Finland-based telecoms equipment giant said revenue at its networks operation, where it announced a cut of 1,800 jobs earlier this month, fell 15% to E1.2 billion, while its mobile phone operation showed 1% growth to E5.5 billion.
The high cost of introducing the first implementation of 3G technologies was a big factor in the operating loss of E10.4 million recorded by the networks business, and the aim now is to get it profitable on quarterly revenue of E1.4 billion, 15% above the current level.
Chief executive Jorma Ollila said there had been no improvement in demand for network equipment from wireless operators, and it expects none in the near term. Nokia is also pruning its product range in an effort to return the business to profitability.
The substantial improvement in profit masks deeper problems. Average selling prices of handsets are falling. While unit shipments rose 13% to about 38 million in a market that expanded by just 10%, the value of sales increased by only 1% because much of the growth has been in emerging markets where low prices are important. The big hope now is that demand will take off for phones with color screens and more sophisticated features.
Source: Computerwire/Datamonitor
Related research: Datamonitor: Mobile Consumer Update; data data data (DMTC0864)
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