Nokia reported a $834 million loss for the third quarter as the company wrote down $1.35 billion on its Nokia Siemens Networks business. The company’s stock fell about 11% on the news to $13.70. The quarter marks the first time the handset giant has posted a loss since it began reporting quarterly in 1996. The company recorded a $1.6 billion profit a year ago.
The news wasn’t all bad, however. In its key handset business, Nokia reported sales of $14.6 billion, down 20% year over year, but up 5% sequentially. The world’s leading handset manufacturer said it shipped 108.5 million units in the quarter, down 8% year over year, but up 5% from the previous quarter. Overall, the company said it expects global handsets sales from all manufacturers to be down 7% this year, which is better than the 10% previously forecast. Nokia said its market share remains steady at 38%. CEO Olli-Pekka Kallasvuo said volume sales were somewhat constrained due to component shortages. The company also saw a decrease in its average selling price year over year, from $107.37 in Q3 2008 to $92.46 this quarter, but said the price remained consistent with Q2 2009.
“Clearly, the level of competition in the handset market, especially in the smartphone market, has increased dramatically since Q2. The fact that Nokia saw its market share in the smartphone market declined to 35% from 41% speaks for itself,” said analyst Julien Blin of JBB Research. “Nokia, which is still dominates both the feature phone and smartphone market, is now facing increased competition, especially from LG, Samsung, Palm, RIM, Apple, and HTC.
The Apple factor
“Apple, which has now sold 22.2 million+ iPhones since the launch of the first iPhone, and is well ahead of Apple’s initial 10 million unit goal for CY 2008, is set to remain one of Nokia’s most serious competitors in the smartphone market, especially in the U.S. and China,” Blin said. “Apple, through the iPhone 3G S, which is now available-starting today in China through China Unicom, clearly has what it takes to gain market share from Nokia in the smartphone market. The fact that Apple is now changing its business model from exclusive carrier deals to multicarrier deals per country where the iPhone is available, is set to play a key role here.”
Palm also could disrupt the market with its Pre device, but LG and Samsung are Nokia’s most serious rivals, Blin said. “LG, which plans to become the No. 2 cellphone maker by 2012, is gaining significant traction, especially in the low-end touschscreen smartphone market where it already sold 20 million units in just two years. The same holds true for Samsung. Of note, LG remains on track to release the LG Chocolate Touch before the Christmas holidays in the U.S, and various Android handsets in Q4 of this year, with a few more due to land in 2010. Currently the LG Dare, a touch screen phone, set to compete with Apple Inc.’s iPhone, is also gaining good traction as the handset vendor indicated that more than 1 million units has been sold in the three-month period.”
Nokia posts Q3 loss of $834 million
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