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Nokia shares rally on strong 4th quarter report

Nokia shares rally on strong 4th quarter report

Nokia shares rallied Thursday after the world's No. 1 mobile phone maker posted a 19 percent rise in fourth-quarter earnings on record sales.
But the closely watched average selling price of Nokia phones continued to slump, driven by sales of low-end products, and CEO Olli-Pekka Kallasvuo vowed to develop new handsets tailored for Nokia's weakest market: North America.
Net profit came to euro1.27 billion (US$1.65 billion), up from euro1.07 billion in the fourth quarter of 2005. 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).
The report sent Nokia shares up 5 percent to close at euro16.26 (US$21.10) on the Helsinki exchange.
Nokia, whose 2006 sales of euro41.1 billion (US$53.45 billion) for the first time eclipsed Finland's national budget, was the last of the world's top mobile phone makers to release fourth-quarter earnings.
Motorola Inc., Nokia's main rival, said last week its profits dropped 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., also saw lower earnings, citing price declines for its other key products such as flash memory chips and liquid crystal displays.
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. Unlike most of its rivals, the joint venture between Japan's Sony Corp. and Sweden's LM Ericsson saw its average selling price rise because of its focus on high-end phones.
"During the fourth quarter there were two clear winners: Sony Ericsson in expensive handsets and Nokia especially in cheaper models," said Jussi Hyoty, chief analyst at FIM Securities in Helsinki. "Motorola has succeeded in neither category. It's stuck in the middle."
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. Nokia said its global market share was 36 percent, up from 34 percent in 2005.
But the 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.
Kallasvuo said Nokia's high-end multimedia unit suffered from delays in bringing new smartphones with music, camera and video features to the market.
"The ambition level in that unit needs to be higher," he told reporters in Helsinki.
Kallasvuo said Nokia planned to introduce up to 40 new models to the market this year, but did not give further details.
Earlier this month Nokia unveiled several new models including the N76, a light, clamshell model that includes a 2-megapixel camera and 2 gigabytes of expandable memory. It also launched the N800 Internet Tablet that permit wireless phone connections through Skype service.
Kallasvuo also 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."
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.
The Espoo, Finland-based 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.
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 from euro34.2 billion.
Separately, Nokia said it plans to repurchase up to euro4 billion (US$5.2 billion) of shares between May 3, 2007 and March 31, 2008.
It 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 New York and 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.


Updated : 2021-04-23 07:38 GMT+08:00