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Nokia profits rise 19 percent in fourth quarter

Nokia profits rise 19 percent in fourth quarter

World-leading mobile phone maker Nokia Corp. said Thursday that its profits jumped 19 percent on growing sales in the fourth quarter, beating market expectations and sending shares soaring.
Net profit came to euro1.27 billion (US$1.65 billion), up from euro1.07 billion in the fourth quarter of 2005. Quarterly sales rose 13 percent to euro11.7 billion (US$15.22 billion), from euro10.33 billion in the same period a year earlier.
Analysts polled by SME Direkt had forecast a net profit of euro1.11 billion (US$1.44 billion) and sales of euro11.58 billion (US$15.06 billion)
Shares in Nokia gained 7 percent to euro16.57 (US$21.55) on the Helsinki exchange after the announcement.
Separately, the Espoo, Finland-based company said it plans to repurchase up to euro4 billion (US$5.2 billion) of shares between May 3, 2007 and March 31, 2008.
Nokia shipped 106 million handsets in the last three months of 2006, up 27 percent from the year-earlier period, winning market shares in every region except North America. But the closely watched average selling price of Nokia phones dropped to euro89 (US$116), from euro93 in the previous quarter and euro99 in the fourth quarter of 2005.
That figure has fallen consistently, reflecting a higher proportion of low-end phones in emerging markets such as India and China.
Chief Executive Olli-Pekka Kallasvuo said Nokia's market share grew to 36 percent, from 34 percent in 2005, "clearly solidifying our No. 1 position in the industry."
"We achieved this result through the strengths of Nokia's world class brand, products, cost structure and efficiency, without sacrificing our operating margins or cash flow."
The Finnish company said it expects the global market for mobile phones to grow 10 percent in 2007 to 978 million handsets and that it remains committed to expanding its market share.
Analysts praised the results, but called for stronger performance in Nokia's high-end multimedia phones which are facing strong competition from other handset makers such as Sony Ericsson and Motorola Inc.
"During the fourth quarter there were two clear winners: Sony Ericsson in expensive handsets and Nokia especially in cheaper models. Motorola has succeeded in neither category. It's stuck in the middle," said Jussi Hyoty, chief analyst at FIM Securities in Helsinki.
Nokia was the last of the world's top mobile phone makers to release fourth-quarter earnings.
Motorola, the company's main rival, said last week that it saw profits drop 48 percent in the last three months of 2006 and announced it would cut 5 percent of its work force to improve operating costs.
The industry's No. 3 player, Samsung Electronics Co., said profit fell 8 percent, citing price declines for other key products such as flash memory chips and liquid crystal displays. But it said it sold 32 million mobile phones during the quarter, a company record.
Meanwhile, the fast-growing Sony Ericsson said its net profit more than tripled in the quarter, beating expectations as record sales of its music and camera handsets helped it gain market shares.
Nokia saw its strongest growth in Latin America, while sales slumped in North America, partly due to the scale-back of Nokia's CDMA unit. Nokia is moving away from the CDMA standard, used in the United States by Verizon Wireless and Sprint Nextel Corp., to focus on GSM, or Global System for Mobile communications, the most popular standard worldwide.
Kallasvuo said Nokia would boost operations at its research unit in San Diego, California, to focus on developing handsets specifically tailored for the U.S. and Canada.
"We are not happy with the position in North America," he told reporters. "We are taking concrete and clear action to improve the situation."
For the full-year 2006, Nokia's net profit rose 19 percent to euro4.31 billion (US$5.61 billion), up from euro3.62 billion the previous year. Sales rose 20 percent to euro41.1 billion (US$53.45 billion) from euro34.2 billion.
Nokia also announced it would delist its shares from the Stockholm stock exchange because of low trading volumes. Apart from Helsinki, the shares are also listed on the Nasdaq and the Frankfurt stock exchanges.
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On the Net:
http://www.nokia.com
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Associated Press Writer Karl Ritter in Stockholm, Sweden, contributed to this report.