After a first-half wobble when it lost market share, Nokia fought back with price cuts and ended the year with fourth-quarter net income down 12.8% at E1.46 billion ($1.3 billion) on revenue 3.1% higher at E9 billion ($11.8 billion).
For the year, net income fell 10.7% to E3.2 billion ($4.18 billion) on revenue 0.6% lower at E29.2 billion ($38.19 billion). Half the company’s sales are invoiced in dollars and it has been hard hit by the decline of the currency against the euro. At constant currency, Nokia estimates that sales rose 6%.
The company’s shares rose 6.21% to $15.22 on an outlook considerably more optimistic than its competitors. For the first quarter, Nokia expects sales to increase 6% to E7 billion – E7.3 billion ($9.1 billion to $9.5 billion), above the E6.9 billion ($9 billion) expected by analysts.
Nokia said it sold 207.7 million handsets in 2004, giving it a 32.3% of the market, but by the four quarter it said its market share had risen to 34%.
North America is the main problem area for the company, and CEO Jorma Ollila admitted that the company did not have a competitive product portfolio in the market. We have identified the problem and we will be back, he said.
The company has plans to launch 40 new handsets in 2005 when it expects the overall market to grow 10% by volume. The surprise success of 2004 was the infrastructure business, and Nokia expects it will be slightly up in euro terms.
Though Ollila said the company has industry-leading margins and its market share is greater than that of its three biggest competitors combined, the worry for the coming year is how far profits will be dented by growing competition.
A growing portion of Nokia phones are equipped with cameras and MP3 players as the company evolves from mobile phones to mobile devices, and this is an area where the Far Eastern consumer electronics makers have considerable experience.
