Nokia's profits continue to slide: Q3's total is down 4% to 634 million euros

Selling a lot more smartphones, a lot more cheaply

Nokia's profits continue to slide: Q3's total is down 4% to 634 million euros
| Nokia financial news

Nokia (NYSE: NOK) has announced its Q3 2010 financials for the three months ending September 30.

Net sales were €10.3 billion ($14.3 billion), up 5 percent year on year.

However, operating profit was €634 million ($883 million), down 4 percent year on year.

As usual, Nokia's Devices & Services division booked the majority of sales - €7.2 billion ($10 billion), up 4 percent year on year.

As with Nokia's Q2 period, it saw a fall in profitability however, down 5 percent to €750 million ($1 billion) year on year.

The above figures relate to non-IFRS results, which exclude special items, making yearly and quarterly comparisons more meaningful.

Under alternative accounting principles, Nokia's standard reported operating profit was €403 million ($561 million), compared to a loss of €426 million ($592 million) a year ago. Net sales were the same in both flavours.

Nokia operating cash flow was €439 million ($611 million), and it ended the quarter with total cash and other liquid assets of €10.2 billion ($14 billion), compared to a total of €9.5 billion ($12 billion) three months ago.

Biggest, but shrinking

As noted by Steve Jobs, Nokia remains the world's largest mobile device manufacturer.

It estimates its overall market share is 30 percent, down from 34 percent in Q2 2010. Nokia has around 38 percent of smartphone market, compared to 41 percent last quarter.

Nokia shipped 110.4 million phones during the three months period, of which 26.5 million, or 24 percent, were smartphones.

Total shipments were up 2 percent year on year, but category-wise, feature phones (Series 30 and 40 devices) were down 9 percent, while smartphones shipments were up 61 percent.

The Average Selling Price of a Nokia feature phone increased from €41 ($57) to €42 ($58) year on year, while the ASP of its smartphones dropped dramatically from €190 ($264) to €136 ($189), down 28 percent.

Can Elop pull it up?

It's not good news for incoming CEO Stephen Elop.

"Our company faces a remarkably disruptive time in the industry, with recent results demonstrating that we must reassess our role in and our approach to this industry," he said, giving context to 1,800 jobs losses.

However, as you'd expect, he's enthusiastic about the future.

"In the five weeks since joining Nokia, I have found a company with many great strengths and a history of achievement that are second to none in the industry," he added.

"Some of our most recent product launches illustrate that we have the talent, the capacity to innovate, and the resources necessary to lead through this period of disruption. We will make both the strategic and operational improvements necessary to ensure that we continue to delight our customers and deliver superior financial results to our shareholders."

[source: Nokia]