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Nokia's Q109 profits nosedive, future outlook not entirely bleak

Zach Epstein
April 16th, 2009 at 9:42 AM

Nokia released its financials for the first quarter of 2009 this morning and well, it’s hard not to focus on one area in particular: profits. Nokia’s net income in the first quarter of this year rang up at €122 million, down from €1.22 billion in Q1 2008. That’s no typo… Net plummeted 90%. The forecast had been set at €232 million, making the news a bit less shocking as a sharp decline was expected — just not quite this sharp. OPK (Nokia CEO Olli-Pekka Kallasuvo) had this to say:

In what has been an exceptionally tough environment, we continue to invest in a focused manner in consumer Internet services delivered across our broad portfolio of mobile devices. Combined, these solutions will drive our future growth. As an example in Q1, I am especially pleased with the performance of our first mass market touch product, the Nokia 5800 XpressMusic. Together with Comes With Music, it is a great example of Nokia providing solutions that consumers value.

Regarding the health of the overall mobile device market, the inventory already in the sales channels decreased substantially during Q1 due to extensive destocking by operators and distributors. This adversely impacted our sales volumes in the quarter. However, it has also resulted in the demand picture becoming more predictable as we enter the second quarter.

Nokia still managed to push 93.2 million units out the door in Q109, down only 19% year over year, and margins stayed relatively flat which is a positive note. The company retains its plans to shed €700 million in operating expenses in 2010 however, which is another sign that things will likely get worse before they get better. As much as Nokia enjoys its new Internet Company branding, the space to watch is entry-level and mid-level devices as other areas of its business just aren’t bringing home the bacon right now. The Ovi line is good fun and the $700+ Nokia N97 due out soon will be fun to tinker with, but playing catch up with mobile services and peddling ridiculously overpriced handsets aren’t going to right this ship. To highlight this point, Nseries sales dropped to 5 million in Q109 from 8 million units sold in Q408.

The service portfolio is in a good place right now — let’s see how it can be pushed alongside new and exciting entry-level and mid-level handsets. New and exciting, after all, is a good place for Nokia to be. The company today clarified that it has sold 3 million 5800 XpressMusic devices in just one quarter of availability. In other words, its first touchscreen S60 handset which also happens to be quite affordable on contract, is selling like hotcakes.


Zach Epstein

Zach Epstein has worked in and around ICT for more than 15 years, first in marketing and business development with two private telcos, then as a writer and editor covering business news, consumer electronics and telecommunications. Zach’s work has been quoted by countless top news publications in the US and around the world. He was also recently named one of the world's top-10 “power mobile influencers” by Forbes, as well as one of Inc. Magazine's top-30 Internet of Things experts.

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