Nokia optimistic as second quarter profits down 31-percent

By Peggy Kataveli, CMA, B2P
Published on Thursday July 22, 2010 at 3:22 pm ET
Updated 07-22-10, 3:38 pm ET

The top mobile phone maker by volume in the world, Nokia, today released earnings for the second quarter of 2010.

The company reported a massive operating loss of EUR 295-million, marking a significant 31-percent increase in operating losses compared to the same period last year.

Nokia is still shipping the most volume when it comes to mobile phones in the world, posting net sales of EUR 10-billion (shipping 111.1-million units in the period), up 1-percent YoY, but the company is suffering from slumping profits because it is selling fewer smartphones that normally carry higher margins.

 From the total volume of shipped units, only 24-million were either smartphone or mobile computer devices.

Other business units Nokia owns, including NAVTEQ and Nokia Siemens Networks (NSN) have also underperformed in the second quarter of this fiscal year, posting significant losses in operating margin compared to the previous quarter.

Nokia chief executive officer Olli-Pekka Kallasvuo said today there are many reasons for investors to be optimistic about the company’s future, citing continued growth in the global mobile market.

Additionally, the company is very optimistic about its upcoming Nokia N80 smartphone model that will be powered by the next-generation Symbian operating system version 3.

The company has not disclosed much information about the new operating system, only saying the N80 will deliver the most superior user experience of any other device from the company.

The Nokia N80 will available some time in the third quarter.

Nokia continues to face intensifying competition from chief rivals, mainly Apple and Google.

Apple continues to see very strong demand for its iPhone 4 that includes seamless video conferencing, the most available apps on any smartphone, among other features.

The iPhone 4 is scheduled for its Canadian debut on July 30.

Earnings per share (EPS) was $0.6 in Q2 ’10, compared to $0.10 in Q2 ’09.

The Nokia stock (NYSE:NOK) closed nearly 4-percent up to $9.17 per share in today’s trading session.

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Peggy holds a Bachelor Arts degree with honors in Economics from York University in Toronto, Canada. She is a Certified Management Accountant (CMA). She has also passed Level I of the Chartered Financial Analyst (CFA) Program. She is also a realtor. Write to [email protected]
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