Nokia profits up 25% but shares fall on market concerns

Nokia is reporting a 25% increase in Q1 profits, up to USD1.9bn from USD1.6bn for the same period last year. Revenue rose 28% to USD20bn from USD15.6bn, bouyed by strong performance in emerging markets such as Africa, Asia and the Middle East. The company says it sold 115m handsets during the period, a 27% increase from the same period in 2007, but its overall share of the world market dropped to 39% in Q1 from 40% in the final quarter of 2007.

Despite the positive results, company stock dropped 13.5% to USD28.76 following the announcement, primarily due to analyst expectations of profit increases of around 42% for the period.

Nokia Chief Executive Olli-Pella Kallasvuo criticised investors for pushing the share price down, saying that the company’s performance for the quarter did not warrant a stock slump. Kallasvuo says that global economic concerns and higher labour and material costs would not see a tremendous impact on Nokia’s future performance as mobiles have become a “necessity” item, with the company predicting an overall 10% growth in industry sales by the end of the year.

However, Nokia does admit that the mobile market expects to see a decline in Euro terms for the year, with US recession concerns and possible flow-on European effects driving down demand in established mobile markets. The company saw its US sales drop 45.8% on Q1 2007 results and European sales rose only 7%. These results are expected to be countered by emerging market growth however, with Latin American sales up 68%, Asia Pacific sales up 44%, Chinese sales up 34% and African and Middle Eastern sales increasing 29%.

Published by Reinout te Brake

Reinout is a games investor and strategic business consultant specializing in the games industry. Reinout established his credentials through his own successful investments, start-ups, consulting and (advisory) board positions that led through time to strong bonds with key stakeholders in this fast paced industry. He is known for his outstanding results in the gaming industry. He has worked with many game studios around the globe and is therefore well known in the international gaming industry. Check out his games podcast; https://www.game-consultant.com

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