Nokia 3Q profits dropped 30 percent
Nokia Corporation, the world's largest cell phone maker, lost market share in the third quarter as profits dropped 30 percent because of falling sales and lower prices on the handsets that did sell.Nokia said its market share was shrinking, ticking in at just 38 percent in the third quarter from 40 percent in the previous three-month period and from 39 percent in the third quarter of 2007.
Net profit in July through September plummeted to 1.09 billion euros ($2.7 billion), from 1.56 billion euros a year earlier. Net sales dropped 5 percent to 12.2 billion euros ($16.6 billion), from 12.9 billion euros.
Nokia shares fell after the report but the stock rallied and was almost unchanged in late trading in Helsinki. Nokia's U.S. shares rose $1.46, or 9.7 percent, to $16.57.Last month, Nokia had warned that its market share would drop because of price cuts by competitors, but said it would not change its strategy.
"We said we would not participate in the aggressive pricing competition in the third quarter and I believe that the decision was correct and will repay us in the long run," Nokia CEO Olli-Pekka Kallasvuo said.
As Nokia continues to sell an increasing proportion of cheaper phones in emerging markets, the average selling price of its handsets - a much-watched indicator in the industry - also is on a downward curve. In the last quarter, the average selling price was 72 euros ($98), down from 82 euros in the third quarter last year.
Despite the global financial meltdown, Nokia said it expects sales to increase in the final quarter, with a possible slight gain in market share. It repeated its estimate that the overall industry will grow 10 percent in 2008, reaching 1.26 billion cell phones sold by the end of the year.
Nokia said it would continue to focus on providing Internet services for its mobile customers, including music, navigation services and games on handsets. this month it launched Comes With Music, which provides millions of tracks from leading artists for download onto Nokia handsets, and introduced its first touch-screen phone in years, the 5800, in a challenge to rivals such as Apple's iPhone.
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