Finnish mobile devices maker Nokia Corp. (NOK), Thursday, reported higher profit for the fourth quarter of fiscal 2009, helped by volume growth that was better than mobile device industry and lower costs. On a non-IFRS basis, excluding special items, the company's profit declined year-over-year. Nokia also announced the approval by its board an equity program for its employees.
The company's fourth-quarter profit attributable to equity holders of the parent, on a reported basis, was EUR 948 million, compared to a profit of EUR 576 million in the year-ago quarter. Earnings per share rose to EUR 0.26 from EUR 0.15 last year.
On a non-IFRS basis, profit attributable to equity holders of the parent reached EUR 912 million, down from EUR 958 million in the prior-year quarter. Non-IFRS earnings per share were EUR 0.25 compared with EUR 0.26 a year ago.
The non-IFRS results exclude various special items in both periods, intangible asset amortization, other purchase price accounting related items and inventory value adjustments arising from the formation of Nokia Siemens Networks and all business acquisitions completed after June 30, 2008.
For the preceding third quarter, Nokia reported a loss attributable to equity holders of the parent of EUR 559 million or EUR 0.15 per share. On a non-IFRS basis, the company's third-quarter profit attributable to equity holders of the parent was EUR 634 million or EUR 0.17 per share.
Nokia's fourth quarter net sales declined 5% to EUR 11.99 billion from EUR 12.66 billion in the prior-year quarter. Sequentially, sales were up 22% from EUR 9.81 billion in the third quarter. At constant currency, group net sales decreased 4% year-on-year.
Based on geographies, Europe recorded sales of EUR 4.54 billion, down 15% from last year. Middle-East & Africa sales were EUR 1.53 billion, a decline of 4% from EUR 1.58 billion in the prior-year quarter. Greater China sales grew 21% to EUR 1.67 billion, and Asia-Pacific sales were EUR 2.61 billion, an increase of 7% from last year. North America sales rose 5% from the prior-year quarter to EUR 602 million, while Latin America posted sales of EUR 1.04 billion, down 22% from EUR 1.34 billion in the previous year period.
Net sales of Devices & Services increased 0.5% to EUR 8.18 billion from EUR 8.14 billion a year ago, helped by higher volumes in several regions due to strong demand. Services contributed EUR 169 million to the total Devices & Services net sales. Services billings were EUR 226 million in the quarter. Nokia also stated that net sales of the Devices & Services business grew year-on-year in Greater China, Middle East & Africa and Asia-Pacific, while it witnessed a decline from last year in Europe, Latin America and North America.
Total mobile device volumes were 126.9 million units in the fourth quarter, an increase of 12% year-on year and 17% sequentially. Based on Nokia's estimate, the overall industry mobile device volumes were 329 million units for the period, representing an increase of 8% from last year and 14% from the third quarter.
Further, the company reported fourth-quarter converged mobile device volumes, comprising its smartphones and mobile computers, of 20.8 million units, compared with 15.1 million units in the fourth quarter of 2008 and 16.4 million units in the third quarter of 2009. Nokia also stated that its share of the converged mobile device market was an estimated 40% in the fourth quarter, up from an estimated 35% in the third quarter.
Nokia said it shipped approximately 4.6 million Nokia Nseries and approximately 6.1 million Nokia Eseries devices during the fourth quarter, higher than the combined 8.9 million Nseries and Eseries devices shipped in the prior quarter.
According to the company, its mobile device market share for the quarter was 39%, compared with 37% a year ago, driven by higher market share in all regions except North America, where the company's market share was flat.
During the quarter, Nokia's average selling price, or ASP, for its mobile devices was EUR 63, lower than EUR 71 in the prior-year quarter, primarily due to price erosion, a higher proportion of lower-priced entry level device sales and unfavorable changes in foreign exchange rates.
Further, NAVTEQ, a wholly-owned subsidiary of Nokia and a provider of Geographic Information Systems or GIS data, reported a 10% increase in sales to EUR 225 million from EUR 205 million last year, reflecting growth in mobile devices and improved conditions in the automotive industry.
Nokia Siemens Networks, a joint venture between Nokia and Siemens AG (SI), generated quarterly sales of EUR 3.6 billion, down 16% from EUR 4.3 billion in the previous year, due to challenging competitive factors and market conditions. At constant currency, Nokia Siemens Networks net sales decreased 17%. Of the total Nokia Siemens net sales, services contributed EUR 1.7 billion.
In November 2009, Nokia Siemens had announced a reorganization of its business structure and a plan to improve its financial performance, including targeted reductions of EUR 500 million in annualized operating expenses and production overheads by the end of 2011.
As part of this effort, the company is conducting a global personnel review which may lead to headcount reductions in the range of about 7% - 9% of its approximately 64,000 employees. Nokia Siemens estimates that these reductions will lead to total charges in the range of EUR 550 million to be recorded mainly over the course of 2010.
For fiscal 2009, Nokia reported profit attributable to equity holders of the parent of EUR 891 million or EUR 0.24 per share, compared with EUR 3.99 billion or EUR 1.05 per share last year.
On a non-IFRS basis, profit attributable to equity holders of the parent declined to EUR 2.46 billion or EUR 0.66 per share from EUR 5.08 billion or EUR 1.34 per share a year ago. The company's full-year sales totaled EUR 40.98 billion, lower than EUR 50.71 billion in fiscal 2008. Non-IFRS sales were EUR 40.99 billion, compared with EUR 50.72 billion a year earlier.
Nokia said its Board of Directors will propose a dividend of EUR 0.40 per share for 2009, in line with last year. The Board has also resolved to convene the company's Annual General Meeting on May 6.
Separately, Nokia today announced that its Board of Directors has approved an Equity Program 2010, under which the company will offer Performance Shares, Stock options and Restricted Shares to its employees.
The Performance Shares will be offered as the main equity-based incentive to approximately 4,500 employees, and the Stock options will be used in conjunction with performance shares on a limited basis for senior managers. The company will grant Restricted Shares on a highly selective basis to high potential and critical employees. The Performance Share Plan 2010 has a three-year performance period, 2010 to 2012.
Nokia stated that the grant of Performance Shares in 2010 may result in an aggregate maximum payout of 17 million Nokia shares. The Stock Options will be granted under Nokia Stock Option Plan 2007, which has a total size of 20 million stock options can be granted until December 31, 2010. The company plans to grant a maximum of 8 million Stock Options during 2010.
Additionally, Nokia announced that Juha Äkräs has been appointed as Executive Vice President of Human Resources. The nomination will come into effect as of April 1, 2010. Äkräs will also become a member of the Group Executive Board.
Äkräs, currently Senior Vice President, is co-heading Human Resources with Hallstein Moerk, the current Executive Vice President of Human Resources. After heading Human Resources at Nokia for eleven years, Moerk will step down from his current position at the end of March. He will also leave the Nokia Group Executive Board at the same time. Moerk will act as Executive Advisor in Nokia until his retirement at the end of September 2010.
Among others in the sector, Motorola Inc. (MOT) today reported fourth-quarter net earnings attributable to the company of $142 million or $0.06 per share, compared to a loss of $3.66 billion or $1.61 per share in the same quarter last year. Net sales were $5.72 billion, compared to $7.14 billion in the prior-year quarter.
Another peer, Swedish telecommunications equipment firm LM Ericsson Telephone Co. (ERIC) has reported an 82% slide in profit for the fourth quarter, hurt mainly by a decline in sales amid reduced operator spending in a number of markets. The company's net income plunged to SEK 0.7 billion from SEK 4.1 billion in the previous year. Earnings, on a per share basis, dropped 92% to SEK 0.10 from SEK 1.21 in the prior-year quarter. Net sales were SEK 58.3 billion, down from SEK 67 billion a year earlier.
Going forward, Nokia expects Devices & Services net sales to be between EUR 6.5 billion and EUR 7.0 billion in the first quarter of 2010. Nokia Siemens' first-quarter net sales are projected to be between EUR 2.6 billion and EUR 2.9 billion.
Nokia and Nokia Siemens continue to expect a flat market in euro terms for the mobile and fixed infrastructure and related services market in 2010. They also continue to target that Nokia Siemens will grow faster than the market in 2010.
Further, Nokia continues to expect industry mobile device volumes to be up approximately 10% in 2010 compared to 2009. The company still expects its mobile device volume market share to be flat in 2010 versus 2009.
NOK is trading at $14.13, up $1.21, on a volume of 25.46 million shares.
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