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Nokia has said third quarter net profits fell by 18 percent from the same period last year as demand for handsets and networks declined.
The world's biggest mobile phone maker reported that its net profits for Q3 2001 were EUR760 million compared to EUR923 million in Q3 2000. Pro-forma earnings per share (diluted) were EUR0.16 compared to EUR0.19 a year ago. Nokia had previously estimated earnings per share for the quarter of between EUR0.14 and EUR0.16.
Nokia also said that net sales in its latest quarter were EUR7,050 million, which was a seven percent decrease compared with the previous year. Nokia Networks saw its net sales fall by 14 percent over the last year to EUR1,659 million and Nokia Mobile Phones reported a three percent decline in sales during the last 12 months to EUR5,269 million.
Despite the results, Nokia's chairman and chief executive, Jorma Ollila, remained upbeat about the company's prospects. "While the market environment has had an inevitable impact on Nokia's top-line growth, we have continued to translate our core strengths of strong brand, excellence in execution and winning products into profitable results," commented Ollila in a statement. He did not, however, make any predictions for income or growth in the fourth quarter.
Nokia, which makes around one third of the world's mobile phones, has been hit by the economic slowdown that has seen consumers and phone companies reduce their spending in the mobile sector. However, it is thought that it is better placed than its rivals to cope with the downturn.
Motorola and Ericsson are both planning massive job cuts of 39,000 and 20,000 respectively. In comparison, Nokia is reducing its workforce by 1,500. Also, each Nokia employee generated sales of USD452,000 last year, while Ericsson had revenue of USD247,000 per worker and Motorola USD256,000.
"Nokia, as a flexible, lean and focused organisation has done more than just weather the storm of the past several months," said Ollila. "We succeeded in sustaining solid profitability and high cumulative cash flow of EUR3.9 billion for the first nine months of this year in an intensely competitive and volatile environment."
And while Ollila might not have wanted to comment on future growth, Nokia's president of its Mobile Phones division recently said that the industry is on the verge of a new growth phase.
"The mobile phone sector has a unique period of growth behind it, but the next (period) is already coming," said Matti Alahuhta in Finnish regional daily Turun Sanomat. "Already within half a year there will be devices on the market that use completely new technology and combine different technologies," he said.
Mobile phone sales are expected to fall for the first time this year to less than 400 million units from over 400 million last year, but increase again next year as consumer start buying 2.5G enabled phones, which offer an "always-on" connection to a stripped-down version of the Internet.
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