Telecom News --

Nokia Q4 2010 net sales EUR 12.7 billion, up 6% year-on-year

Espoo, Finland , 30 January, 2011

Nokia Q4 2010 net sales EUR 12.7 billion, non-IFRS EPS EUR 0.22 (reported EPS EUR 0.20) Nokia 2010 net sales EUR 42.4 billion, non-IFRS EPS EUR 0.61 (reported EPS EUR 0.50)

FOURTH QUARTER 2010 HIGHLIGHTS

• Nokia net sales of EUR 12.7 billion in Q4 2010, up 6% year-on-year and 23% sequentially (flat and up 24% at constant currency).
  
• Devices & Services net sales of EUR 8.5 billion in Q4 2010, up 4% year-on-year and 18% sequentially (down 3% and up 19% at constant currency).
  
• Services net sales of EUR 201 million in Q4 2010, up 21% year-on-year and 26% sequentially; billings of EUR 352 million, up 57% year-on-year and 8% sequentially.
  
• Nokia total mobile device volumes of 123.7 million units in Q4 2010, down 3% year-on-year and up 12% sequentially.
  
• Nokia converged mobile device (smartphone and mobile computer) volumes of 28.3 million units in Q4 2010, up 36% year-on-year and 7% sequentially.
  
• Nokia mobile device ASP (including services revenue) of EUR 69 in Q4 2010, up from EUR 64 in Q4 2009 and EUR 65 in Q3 2010.
  
• Devices & Services gross margin of 29.2% in Q4 2010, down from 34.3% in Q4 2009 and up from 29.0% in Q3 2010.
  
• Devices & Services non-IFRS operating margin of 11.3% in Q4 2010, down from 15.4% in Q4 2009 and up from 10.5% in Q3 2010.
  
• NAVTEQ net sales of EUR 309 million in Q4 2010, up 37% year-on-year and 23% sequentially (up 33% and 27% at constant currency).
  
• Nokia Siemens Networks net sales of EUR 4.0 billion in Q4 2010, up 9% year-on-year and 35% sequentially (up 7% and 37% at constant currency).
  
• Nokia Siemens Networks non-IFRS operating margin of 3.7% in Q4 2010, down from 5.5% in Q4 2009 and up from -3.9% in Q3 2010.
  
• Nokia operating cash flow of EUR 2.4 billion and cash generated from operations of EUR 2.5 billion in Q4 2010.
  
• Total cash and other liquid assets of EUR 12.3 billion and net cash and other liquid assets of EUR 7.0 billion at the end of Q4 2010.
  
• Nokia taxes continued to be unfavorably impacted by Nokia Siemens Networks taxes as no tax benefits are recognized for certain Nokia Siemens Networks deferred tax items. In Q4 2010, this was more than offset by a favorable profit mix and certain current quarter benefits both in Devices & Services and in Nokia Siemens Networks taxes. If Nokia's estimated long-term tax rate of 26% had been applied, non-IFRS Nokia EPS would have been approximately 2.5 Euro cents lower in Q4 2010.

FULL YEAR 2010 HIGHLIGHTS

• Based on Nokia's preliminary estimate, industry mobile device volumes increased 13% in 2010, compared to 2009 (based on Nokia's revised definition of the industry mobile device market applicable beginning in 2010).
  
• Based on Nokia's preliminary market estimate, Nokia's mobile device volume market share decreased to 32% in 2010, compared to 34% in 2009 (based on Nokia's revised definition of the industry mobile device market share applicable beginning in 2010).
  
• Nokia's estimated mobile device value market share was down slightly in 2010, compared to 2009.
  Nokia's non-IFRS operating expenses in Devices & Services were approximately EUR 5.6 billion in 2010, compared to EUR 5.8 billion in 2009.
  
• Devices & Services non-IFRS operating margin was 10.9% in 2010, compared to 12.5% in 2009.
  Based on preliminary estimates, Nokia and Nokia Siemens Networks believe the market for mobile and fixed infrastructure and related services was approximately flat in Euro terms in 2010, compared to 2009.
  
• Based on preliminary estimates, Nokia and Nokia Siemens Networks believe Nokia Siemens Networks grew slightly faster than the market in Euro terms in 2010, compared to 2009.
  Nokia Siemens Networks non-IFRS operating margin of 0.8% in 2010, compared to 0.2% in 2009.

STEPHEN ELOP, NOKIA CEO:
"In Q4 we delivered solid performance across all three of our businesses, and generated outstanding cash flow. Additionally, growth trends in the mobile devices market continue to be encouraging. Yet, Nokia faces some significant challenges in our competitiveness and our execution. In short, the industry changed, and now it's time for Nokia to change faster."

NOKIA OUTLOOK

• Nokia expects Devices & Services net sales to be between EUR 6.8 billion and EUR 7.3 billion in the first quarter 2011.
  
• Nokia expects its non-IFRS operating margin in Devices & Services to be between 7% and 10% in the first quarter 2011.
  
• Nokia and Nokia Siemens Networks expect Nokia Siemens Networks' net sales to be between EUR 2.8 billion and EUR 3.1 billion in the first quarter 2011.
  
• Nokia and Nokia Siemens Networks expect the non-IFRS operating margin in Nokia Siemens Networks to be between -3% and breakeven in the first quarter 2011.

Nokia will hold a Strategy and Financial Briefing in London on February 11, 2011. In connection with that event, Nokia plans to discuss its strategy and objectives going forward.

Devices & Services
Net Sales. The following chart sets out our Devices & Services net sales for the periods indicated, as well as the year-on-year and sequential growth rates, by category.

Note 1: Series 30 and Series 40-based devices ranging from basic mobile phones focused on voice capability to devices with a number of additional functionalities, such as Internet connectivity, including the services and accessories sold with them.
Note 2: Smartphones and mobile computers, including the services and accessories sold with them.

The following chart sets out Devices & Services net sales for the periods indicated, as well as the year-on-year and sequential growth rates, by geographic area.

Year-on-year, the 4% net sales increase resulted from higher ASPs partially offset by lower device volumes in most regions.  Our device volumes in the fourth quarter 2010 were adversely affected by shortages of certain components, which we expect to continue to impact our business at least through the end of the first quarter 2011, as well as by a number of supply and logistics challenges driven by the tight component availability during the quarter. Sequentially, the 18% net sales increase reflected higher ASPs, as well as higher device volumes in most regions, partially offset by a number of supply and logistics challenges driven by the tight component availability during the fourth quarter 2010. At constant currency, Devices & Services net sales would have decreased 3% year-on-year and increased 19% sequentially.

Of our total Devices & Services net sales, services contributed EUR 201 million in the fourth quarter 2010, compared with EUR 166 million in the fourth quarter 2009 and EUR 159 million in the third quarter 2010. Services billings in the fourth quarter 2010 were EUR 352 million, compared with EUR 224 million in the fourth quarter 2009 and EUR 325 million in the third quarter 2010.

Volume and Market Share. The following chart sets out our Devices & Services volumes for the periods indicated, as well as the year-on-year and sequential growth rates, by category.

Note 1: Series 30 and Series 40-based devices ranging from basic mobile phones focused on voice capability to devices with a number of additional functionalities, such as Internet connectivity, including the services and accessories sold with them.
Note 2: Smartphones and mobile computers, including the services and accessories sold with them.

In the fourth quarter 2010, the overall industry mobile device volumes were 402 million units, based on Nokia's preliminary estimate, representing an increase of 12% year-on-year and 11% sequentially. Nokia's preliminary estimated mobile device market share was 31% in the fourth quarter 2010, down from an estimated 35% in the fourth quarter 2009 and up from an estimated 30% in the third quarter 2010 (based on Nokia's revised definition of the industry mobile device market share applicable beginning in 2010 and applied retrospectively to 2009 for comparative purposes only).

Of the total industry mobile device volumes, converged mobile device industry volumes in the fourth quarter 2010 increased to 90.5 million units, based on Nokia's preliminary estimate, representing an increase of 73% year-on-year and 29% sequentially. Nokia's preliminary estimated share of the converged mobile device market was 31% in the fourth quarter 2010, compared with an estimated 40% in the fourth quarter 2009 and an estimated 38% in the third quarter 2010.

The following chart sets out our mobile device volumes for the periods indicated, as well as the year-on-year and sequential growth rates, by geographic area.

Nokia's 3% year-on-year decrease in global mobile device volumes during the fourth quarter 2010 was driven primarily by the intense competitive environment, as well as certain component shortages and a number of supply and logistics challenges resulting from the tight component availability during the quarter. This volume decline was somewhat offset by a year-on-year improvement in the overall market environment. On a sequential basis, Nokia's 12% increase in global mobile device volumes was primarily due to increased seasonal demand for our devices offset to some extent by a number of supply and logistics challenges driven by the tight component availability during the fourth quarter 2010.

Average Selling Price. The following chart sets out our Devices & Services ASP for the periods indicated, as well as the year-on-year and sequential growth rates, by category.

Note 1: Series 30 and Series 40-based devices ranging from basic mobile phones focused on voice capability to devices with a number of additional functionalities, such as Internet connectivity, including the services and accessories sold with them.
Note 2: Smartphones and mobile computers, including the services and accessories sold with them.

The year-on-year 7% increase in our ASP was primarily due to converged mobile devices representing a greater proportion of our overall mobile device sales and the appreciation of certain currencies against the Euro, offset to some extent by general price erosion and a higher proportion of lower-priced converged mobile device sales. On a sequential basis, the 6% increase in our ASP was primarily driven by an increased proportion of sales of higher priced converged mobile devices and foreign exchange hedging, offset to some extent by the depreciation of certain currencies against the Euro. The 17% year-on-year decline in our converged mobile devices ASPs was mainly driven by general price erosion and an increase in the proportion of lower-priced converged mobile devices sales. The 14% sequential increase in our converged mobile devices ASPs was mainly driven by an increased proportion of sales of higher prices converged mobile devices during the fourth quarter 2010.

Profitability. Devices & Services gross profit (reported and non-IFRS) decreased 12% to EUR 2.5 billion, compared with EUR 2.8 billion in the fourth quarter 2009, and increased 19% compared to EUR 2.1 billion in the third quarter 2010. The gross margin (reported and non-IFRS) was 29.2% in the fourth quarter 2010, compared with 34.3% in the fourth quarter 2009 and 29.0% in the third quarter 2010. The year-on-year gross margin decline was primarily due to material cost erosion being less - driven by both shortages of certain components and the appreciation of certain currencies against the Euro - than general product price erosion, as well as a negative impact from foreign exchange hedging. The impact of these factors was offset to some extent by converged mobile devices representing a greater proportion of our overall mobile device volumes. Sequentially, the gross margin increase was primarily due to an increased proportion of sales of higher priced mobile devices and the depreciation of certain currencies against the Euro, offset to a large extent by a negative one-quarter impact from foreign exchange hedging as well as lower royalty income in the fourth quarter 2010. Nokia sees shortages of certain components impacting our business at least through the end of first quarter 2011.

Devices & Services reported operating profit decreased 16% to EUR 1 018 million, compared with EUR 1 219 million in the fourth quarter 2009, and increased 26% compared with EUR 807 million in the third quarter 2010. The reported operating margin was 12.0% in the fourth quarter 2010, compared with 14.9% in the fourth quarter 2009 and 11.3% in the third quarter 2010. Devices & Services non-IFRS operating profit decreased 24% to EUR 961 million compared with EUR 1 257 million in the fourth quarter 2009, and increased 28% compared with EUR 750 million in the third quarter 2010. The non-IFRS operating margin was 11.3% in the fourth quarter 2010, compared with 15.4% in the fourth quarter 2009 and 10.5% in the third quarter 2010. The year-on-year decrease in non-IFRS operating profit was driven primarily by the lower gross margin. Sequentially, the increase in non-IFRS operating profit was primarily due to higher net sales, offset to some extent by higher operating expenses.

NAVTEQ
Net Sales. Fourth quarter 2010 NAVTEQ reported net sales increased 37% year-on-year to EUR 309 million, compared with EUR 225 million in the fourth quarter 2009, and increased 23% compared to EUR 252 million in the third quarter 2010. The year-on-year and sequential increase in reported net sales was primarily driven by improved sales of map licenses to mobile device customers as well as higher navigation uptake rates in the automotive industry. Sequentially, net sales also benefited from a stronger market for personal navigation devices (PNDs). At constant currency, NAVTEQ net sales would have increased 33% year-on-year and 27% sequentially.

Profitability. In the fourth quarter 2010, NAVTEQ's gross profit (reported and non-IFRS) increased 37% to EUR 271 million, compared with EUR 195 million in the fourth quarter 2009, and increased 27% compared with EUR 213 million in the third quarter 2010. NAVTEQ's gross margin (reported and non-IFRS) increased to 87.7%, compared to a reported gross margin of 86.7% and a non-IFRS gross margin of 87.1% in the fourth quarter 2009, and 84.5% (reported and non-IFRS) in the third quarter 2010.

In the fourth quarter 2010, NAVTEQ's reported operating loss decreased to EUR 19 million, compared with a EUR 56 million loss in the fourth quarter 2009 and a EUR 48 million loss in the third quarter 2010. The reported operating margin was -6.1% in the fourth quarter 2010, compared with -24.9% in the fourth quarter 2009 and -19.0% in the third quarter 2010. NAVTEQ's non-IFRS operating profit was EUR 100 million, compared with EUR 54 million in the fourth quarter 2009 and EUR 74 million in the third quarter 2010.  The non-IFRS operating margin was 32.4% in the fourth quarter 2010, compared with 24.0% in the fourth quarter 2009 and 29.4% in the third quarter 2010. The year-on-year and sequential increase in NAVTEQ's non-IFRS operating margin was primarily due to higher net sales, offset to some extent by higher operating expenses.

Nokia Siemens Networks
Net Sales. The following chart sets out Nokia Siemens Networks net sales for the periods indicated, as well as the year-on-year and sequential growth rates, by geographic area.

The year-on-year 9% increase in net sales was primarily driven by growth in both the product and services businesses in most regions. The sequential 35% increase in net sales was primarily driven by a seasonally stronger infrastructure market in the fourth quarter 2010. Net sales in the fourth quarter 2010 also benefited from an improvement in overall component availability. Of total Nokia Siemens Networks net sales, services contributed EUR 1.8 billion in the fourth quarter 2010, compared to EUR 1.7 billion in the fourth quarter 2009 and EUR 1.4 billion in the third quarter 2010. At constant currency, Nokia Siemens Networks net sales would have increased 7% year-on-year and 37% sequentially.

Profitability. Nokia Siemens Networks reported gross profit decreased 3% to EUR 1 042 million compared with EUR 1 071 million in the fourth quarter 2009, and increased 48% compared with EUR 702 million in the third quarter 2010.  The reported gross margin was 26.3% in the fourth quarter 2010, compared with 29.5% in the fourth quarter 2009 and 23.9% in the third quarter 2010. Nokia Siemens Networks non-IFRS gross profit in the fourth quarter 2010 decreased 6% to EUR 1 045 million compared with EUR 1 108 million in the fourth quarter 2009, and increased 42% compared with EUR 733 million in the third quarter 2010. The non-IFRS gross margin was 26.4% in the fourth quarter 2010, compared with 30.6% in the fourth quarter 2009 and 24.9% in the third quarter 2010.  The lower year-on-year non-IFRS gross margin in the fourth quarter 2010 was primarily due to general price pressure on certain products, a higher proportion of lower margin products in the business mix and to some extent project execution related challenges in the Middle East and Africa. The higher sequential non-IFRS gross margin in the fourth quarter 2010 was primarily due to a more favourable business mix, strong seasonal net sales and the absence of certain items that had a negative impact on the gross margin in the third quarter 2010.

Nokia Siemens Networks fourth quarter 2010 reported operating profit was EUR 1 million, compared with a reported operating profit of EUR 17 million in the fourth quarter 2009 and a reported operating loss of EUR 282 million in the third quarter 2010. The reported operating margin was 0.0% in the fourth quarter 2010, compared with 0.5% in the fourth quarter 2009 and -9.6% in the third quarter 2010. Nokia Siemens Networks non-IFRS operating profit was EUR 145 million in the fourth quarter 2010, compared with a non-IFRS operating profit of EUR 201 million in the fourth quarter 2009 and a non-IFRS operating loss of EUR 116 million in the third quarter 2010.  The non-IFRS operating margin was 3.7% in the fourth quarter 2010, compared with 5.5% in the fourth quarter 2009 and -3.9% in the third quarter 2010. The year-on-year decline in Nokia Siemens Networks non-IFRS operating profit was primarily due to the lower gross margin, which was to some extent offset by higher net sales and lower operating expenses. The sequential increase in Nokia Siemens Networks non-IFRS operating profit was primarily due to higher net sales and gross margin, offset to some extent by higher operating expenses in the fourth quarter 2010.

Q4 2010 OPERATING HIGHLIGHTS
Devices & Services

• Following the start of shipments of the Nokia N8 in the third quarter, Nokia began shipments of two other smartphones based on the new Symbian software: The Nokia C7, a sleek, full-touch smartphone crafted from stainless steel and glass that is designed to appeal especially to social networkers, and the Nokia C6-01, a smaller, full-touch smartphone that features Nokia ClearBlack technology for improved outdoor visibility.
  
• Nokia started shipments of the Nokia C3 Touch & Type, a stainless steel device which combines the touch screen and traditional phone keypad.
  
• Nokia estimates that it became the leader in QWERTY in terms of volume share during the fourth quarter, helped by sales of its affordable QWERTY model, the Nokia C3.
  
• Nokia continued to develop its Ovi services. Highlights for the quarter included:
  
• Store continued to see increased downloads of applications and content. The Store is now attracting more than 4 million downloads a day, compared with more than 2.7 million a day reported in October 2010, boosted by traffic from the new Nokia N8 and Nokia C7, the widespread introduction of operator billing and the increased availability of local applications and content specific to individual markets. According to a study by iResearch published since the end of the quarter, Ovi Store ranks as the leading application store in China by downloads. Other key markets for Ovi Store include Russia and Turkey, where downloads from the Store have reached more than 1 million a week in each market.
  
• Maps continued to scale, and today includes coverage of 180 countries and regions in total, with 100 of them navigable. Additionally, more than 100 cities around the world have dedicated pedestrian navigation.  With the release of the latest version of Ovi Maps, users can download maps directly to their device over Wi-Fi as well as enjoy mapping that includes public transport lines for subways, trams and trains in more than 80 cities around the world. Nokia N8 owners have quickly become among the most active Maps users, spending up to four hours a month using maps and navigating.
  
• Life Tools, Nokia's unique life improvement mobile information services designed especially for emerging markets, was launched in Nigeria, adding Africa's most populous country to the service which already operates in India, Indonesia and China.
  
• Nokia announced that it will use Qt technologies to simplify development for both our own and third party developers. In addition, Nokia announced its intention to support HTML5 for the development of Web content and applications.
  
• Following the withdrawal of other members, the Symbian Foundation, a non-profit entity, transitioned to a licensing operation only and the Symbian platform's development is now under the control of Nokia.
  
• In November 2010, Renesas Electronics Corporation completed its acquisition of Nokia's Wireless Modem business, which was initially announced on July 6, 2010.

NAVTEQ

• NAVTEQ announced its selection by the Federal Communications Commission (FCC) for US map data to support development of a national broadband map.
  
• NAVTEQ announced an expansion in R&D capabilities with the addition of a Global R&D Center in Mumbai, India.
  
• NAVTEQ extended its global agreement with ORTEC, also incorporating additional NAVTEQ Traffic Patterns and NAVTEQ Transport content.
  
• NAVTEQ acquired PixelActive Inc. to accelerate expansion from a 2D to a 3D map and further leverage 3D technologies for all NAVTEQ products.

Nokia Siemens Networks

• Nokia Siemens Networks added three more 3G customers in India, announcing contracts with Idea Cellular, Vodafone Essar and Aircel.
  
• Nokia Siemens Networks continued to gain momentum in the emerging network sharing arena. In France Nokia Siemens Networks won a deal to build an enhanced mobile voice and data network in rural France for SFR, which will be shared with two other operators. In the UK Nokia Siemens Networks announced it had supplied more than 12,000 3G base stations to Mobile Broadband Network Ltd (MBNL), bringing improved coverage and capacity for Three and T-Mobile UK customers.
  
• Nokia Siemens Networks continued to make progress in LTE, announcing contracts with, among others,  Deutsche Telekom in Germany, Elisa in Finland and for  Evolved Packet Core with Tele2 in Sweden.
  
• Nokia Siemens Networks secured its first network outsourcing contract in China with Anhui Unicom; Nokia Siemens Networks also announced plans to expand its global services delivery capability with the opening a new Global Network Operations Centre in Brazil.
  
• NBN Co in Australia awarded Nokia Siemens Networks a contract to supply DWDM optical transport network technology for the national broadband project.
  
• Nokia Siemens Networks announced it will open a Smart Lab in South Korea, focused on developing smart device-optimized applications, services and networks. The lab will explore the potential of wireless broadband technologies for delivering a superior end-user experience.
  
• Nokia Siemens Networks has successfully tested a technology that could significantly increase the data carrying capacity of standard copper wires. The company achieved data transmission speeds of 825 megabits per second (Mbps) over 400 meters of bonded copper lines and 750 Mbps over 500 meters using "Phantom DSL" technology.

-end-

Also read....

Nokia simplifies its organizational structure to accelerate execution and innovation

......more from International Telecom, click here