Thursday, Finnish mobile devices giant Nokia Corp. (NOK) reported a 61% fall in its profit for the second quarter, impacted by one-time charges, absence of prior-year gain, and higher taxes. Adjusted profit rose 8% from last year, while top line grew 4% on strong Nokia Siemens Networks performance, higher mobile device units and improved market share, despite lower average selling price.
Looking forward, the company revised fiscal 2008 mobile device volume growth expectation and said it expects third-quarter mobile device market share to be almost similar sequentially. NOK shares are currently trading up around 8% on the New York Stock Exchange.
Second-quarter net profit fell to 1.103 billion euros from 2.828 billion euros a year ago. Earnings per share were down 60% to 0.29 euros from last year's 0.72 euros.
The 2008-results included 259 million euros of charges related to closure of the Bochum site in Germany, and 201 million euros of restructuring charge and other one time items. The company's prior-year results included special gains of 966 million euros, comprising 1.879 billion euros of non-taxable gain on formation of Nokia Siemens Networks, partly offset by 905 million euros of restructuring charges and other one-time items.
Excluding special items, quarterly net profit rose 8% to 1.365 billion euros from 1.259 billion euros last year. Adjusted earnings per share increased 13% to 0.36 euros from prior year's 0.32 euros.
On a sequential basis, net income and earnings per share declined 10% and 9%, respectively. Also, on an adjusted basis, net profit and earnings per share declined 6% and 5%, respectively from the preceding quarter.
Nokia's second-quarter tax expenses were 394 million euros, compared to 44 million euros last year. Pre-tax profit for the quarter declined to 1.48 billion euros from 2.45 billion euros last year.
The company's second-quarter net sales were 13.15 billion euros, up 4% from 12.59 billion euros last year, and up 4% from 12.66 billion euros in the last quarter. On a constant currency basis, the sales growth was 11% year-over-year, and 7% quarter-over-quarter.
Among divisions, Devices & Services net sales declined 1% to 9.090 billion euros from 9.163 billion euros last year. Meanwhile, net sales from Nokia Siemens Networks climbed 18% to 4.067 billion euros from 3.438 billion euros a year earlier.
Group operating profit fell 38% year-over-year to 1.474 billion euros, while adjusted operating profit climbed 39% to 1.93 billion euros. Adjusted operating margin grew to 14.7% from last year's 11.1%.
In the second quarter, Nokia mobile device volumes rose 21% from last year to 122 million units, while the growth was 6% sequentially. Based on the company's estimate, the overall industry mobile device volume in the quarter rose 15% year-over-year and 3% sequentially to 303 million units.
Nokia estimated mobile device market share of 40%, up from 38% in the previous year, mainly driven by strong position in the fastest growing markets and by strong share gains in Latin America, Asia-Pacific and a slight increase in North America.
The company's mobile device average selling price, or ASP, in the quarter fell to 74 euros from last year's 90 euros, due to a higher proportion of lower priced products and the negative impact of the weaker US dollar.
Commenting on the results, Nokia Chief Executive Officer Olli-Pekka Kallasvuo said, "Nokia delivered increased device market share and strong underlying profitability in the quarter. In the second quarter we saw good momentum in the early stages of our services and software business, and we believe that the next wave of growth will be driven by devices linked with services."
Among peers, Schaumburg, Illinois-based mobile device maker Motorola Inc. (MOT) is scheduled to release its second-quarter results on Thursday, July 31. Motorola expects second-quarter loss from continuing operations in the range of $0.02 - $0.04 per share. On average, 27 analysts polled by First Call/Thomson Financial expect the company to post loss of $0.03 per share for the quarter. Meanwhile 26 analysts expect sales of $7.73 billion, representing a 11.4% fall from last year.
For first six months of fiscal 2008, Nokia's net profit fell to 2.325 billion euros or 0.61 euros per share from 3.807 billion euros or 0.96 euros per share a year ago. Earnings per share, excluding special items, increased to 0.74 euros from 0.58 euros last year. Year-to-date net sales increased 15% to 25.811 billion euros from 22.443 billion euros last year.
Looking ahead, Nokia said it expects its mobile device market share in the third quarter to be almost similar sequentially. Industry mobile device volumes in the third quarter are estimated to be up from the second quarter.
Kallasvuo added, "Looking at the rest of the year, we are optimistic and have had good feedback about the broad range of new products we expect to sell in our device business."
For the fiscal year 2008, Nokia now expects industry mobile device volumes to grow 10% or more from the 1.14 billion units Nokia estimated for 2007. The company previously expected industry mobile device volumes to grow approximately 10% in 2008.
Further, Nokia said it continues to target an increase in its market share in mobile devices in 2008, while Nokia Siemens Networks' market share is still expected to remain constant in 2008, compared to last year.
The company continues to expect the mobile infrastructure and fixed infrastructure and related services market to be flat in Euro terms in 2008. Also, cost synergy target for Nokia Siemens Networks is to achieve substantially all of the 2.0 billion euros of targeted annual cost synergies by the end of 2008.
Nokia completed its approximately $8.1 billion acquisition of Navteq (NVT) on July 10. Nokia said it expects Navteq to be slightly dilutive to earnings per share in 2008, approximately neutral in 2009 and accretive thereafter, excluding purchase price accounting related items arising from the Navteq acquisition. While, on a reported basis, Navteq purchase is expected to be slightly dilutive to earnings per share in 2008, 2009 and 2010, and accretive thereafter.
Nokia currently expects to recognize about 2 billion euros of intangibles related primarily to the navigable map database and customer relationships.
NOK is currently trading at $27.12, up $1.99 or 7.92%, on a volume of 5 million shares.
For comments and feedback contact: editorial@rttnews.com
June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.