Nokia Phone Sales Boosted by Emerging Markets

Growth in developing markets boosted profit for Nokia, despite a significant dip in sales to North America during the second quarter, the number-one mobile phone handset maker said on Thursday.

Nokia’s net profit for the second quarter was 1.1 billion euros (US$1.4 billion as of June 30, the last day of the period reported), up 43 percent over the same quarter last year. Net sales grew 22 percent, reaching 9.8 billion euros compared to 8 billion during the second quarter in the previous year.

Nokia shipped 78.4 million phones, an increase of 29 percent compared to the same period a year earlier. But tough competition from phone makers like Motorola, with its popular Razr phone, forced Nokia to give up a percentage point in market share since the start of the year. Nokia said it had 34 percent of the market, compared to 35 percent in the first quarter this year. Nokia’s share is up compared to a year earlier, when it had 33 percent of the market.

Nokia is selling an increasing number of phones to developing markets. It increased phone sales to China by 58 percent in the quarter compared to last year, 79 percent in Asia-Pacific and 39 percent in the Middle East and Africa. Nokia and other mobile phone companies say that as markets in Europe and North America saturate, they plan to sell more products to markets with emerging wireless industries.

Growth in those new markets made up for a big drop in sales to North America. Nokia sold 13.3 percent fewer phones to North America during the quarter compared to the same quarter last year. That decline was due to the cancellation of an order from a customer for prepay phones, Nokia said.

The shift in sales to emerging markets is beginning to affect the average price of phones. During the quarter, the average selling price of phones sold by Nokia dropped to 102 euros, down from 105 euros in the same quarter last year.

Nokia slightly improved the performance of its enterprise solutions group, one of the few sore spots reported by the company during its first-quarter results. Second-quarter sales for this group, which only recently began selling the enterprise-focused Eseries phones, increased 43 percent to 283 million euros. The enterprise group’s operating loss for the quarter was 63 million euros, compared to 76 million euros in the second quarter last year. The Eseries phones aren’t expected to ship in volume until later this year.

Nokia’s rival, Motorola, on Wednesday reported strong profit for the quarter and record shipments of handsets. Motorola said its handset market share rose more than a percentage point compared to the first quarter, to 22 percent.

-Nancy Gohring, IDG News Service (Dublin Bureau)

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