Smart phones boost Nokia

Helsinki - The world's biggest mobile phone maker, Nokia, on Thursday said strong sales of smart phones and lower costs helped profits rise 65% in the fourth quarter despite a drop in total revenue.

Net profit was €948m ($1.33bn) in the last three months of 2009, up from €576m in the last quarter of 2008, but sales dropped 5.3% to €12bn from €12.7bn.

The Finnish company said it boosted its share of the mobile phone market to 39%, from 38% in the previous quarter and 37% in the fourth quarter of 2008.

Nokia surprised markets and its stock jumped more than 13% to €10.20 ($14.35) in afternoon trading in Helsinki.

In smart phones, where competitors include Research in Motion's BlackBerry and Apple's iPhone, Nokia said its market share grew from 35% to 40%.

"This was the surprise. Many had expected Nokia's share of smart phones to fall even lower from earlier figures but in fact it was up," said Michael Schroeder from FIM Bank. "And across the board Nokia did pretty well."

The company's results were also boosted by the fact that special items, one-time costs which include restructuring charges, were significantly lower than in the comparable quarter in 2008.

Better prepared for the crisis

The mobile phone industry has been hit hard by the financial crisis, and Nokia last year slashed more than 3 000 jobs globally and temporarily laid off thousands in Finland. Its joint network equipment venture with Germany's Siemens - Nokia Siemens Networks - announced some 5 700 job cuts.

As the market leader, Nokia has been better prepared to weather the crisis, but in the third quarter it posted its first quarterly net loss in a decade amid falling sales, lower handset prices and a one-time charge for the fallen value of its network equipment unit.

Sagging sales of network equipment continued in the fourth quarter and were only partly offset by a rise in sales for mobile devices. Nokia sold 127 million handsets, up 12% on the same period in 2008 and 17% more than in the third quarter of 2009.

Meanwhile, the average selling price of Nokia handsets, which had been on a downward curve, saw its first quarterly increase since 2004 - to 63 from 62 in the previous period. In the last quarter of 2008, the average price was 71.

As handset markets have become saturated Nokia has increasingly expanded into providing online services, such as downloads of music, games, maps and the fast transfer of photos and video in a global online market it estimates will reach 100 billion by the end of the year. By the end of 2011 it expects have 300 million active users of its services.

Nokia CEO Olli-Pekka Kallasvuo highlighted the company's announcement last week to provide free navigation services for users of its smart phones, in a drive to counter a similar move by Google. Through its new downloads, Nokia hopes to double the number of GPS navigation users to 50 million worldwide.

Kallasvuo said it was "a good example of how we are leveraging our assets to bring real benefits to consumers."

- AP