Strong Phone Sales Boost Profits for Nokia

Strong phone sales for Nokia during the first quarter helped boost its market share and contributed to solid growth in sales and profits, the company said Thursday.

Nokia reported a first-quarter net profit of 1.05 billion euros (US$1.27 billion, as of March 31, the last day of the period being reported), up 21 percent over 863 million euros in the first quarter of 2005. Net sales increased 29 percent to 9.5 billion euros, compared to 7.4 billion euros in the first quarter last year.

The world’s largest handset maker sold 75.1 million devices during the quarter, 10 percent less than in the fourth quarter, which is typically a strong period for sales, and up 40 percent from the first quarter in 2005. The sales helped Nokia boost its market share by three percentage points, to 35 percent, compared to the same period last year, according to its own estimates.

Nokia has been saying it expects an increasing share of its business to come from new markets, and that appears to be coming true. Market share gains in China, Latin America and Asia-Pacific helped offset a decline in market share in Europe, Nokia said. It expects that 70 percent of growth across the industry this year will come from emerging markets.

The company reiterated its good news from last month that the average selling price of its handsets reached 103 euros in the quarter, above its original expectation of 99 euros. That gain was a result of lower sales in the entry-level phone segment and better sales in the higher-end segment, Nokia said. The N70 multimedia phone, the highest revenue-generating device in the quarter, helped drive up the average, Nokia said.

However, because the bulk of future growth is expected to come from new markets, Nokia warned that the average selling price of phones across the industry should decline this year.

Rival Motorola is also capitalizing on the overall strong mobile phone market. On Tuesday, it reported that it sold more mobile phones during the quarter than ever before. China, India and Africa contributed to its strong sales, which helped lift its market share by 4.8 percentage points from a year earlier, to 21 percent.

-Nancy Gohring, IDG News Service

For related coverage, read Sony Ericsson Profits Surge on Strong Phone Sales.

Check out our CIO News Alerts and Tech Informer pages for more updated news coverage.