Moto’s loss is Nokia’s gain

Nokia edged closer to its goal of 40 per cent share of the handset market this week, after reporting strong results for the devices business.

Head honcho Olli-Pekka Kallasvuo estimated that the Finnish vendor’s share of the handset market rose from 34 per cent to 38 per cent in the last 12 months, with much of the gains coming directly from Motorola’s weakness.

Nokia’s Multimedia unit, which makes the N-Series phones, showed how it’s done, with revenue growth of 42 per cent and its operating margin jumping to 20.1 per cent from 16.1 per cent.

Martin Garner, director of wireless intelligence at Ovum commented that much of this growth came from the flagship N95 and higher volume N70 and N73 devices.

As a result, Nokia raised its outlook for the global mobile handset market this year, now predicting growth of 10 per cent or more in device shipments. Second quarter figures saw a 29 per cent year on year increase in shipments to a total of 100.8 million.

But Garner notes that Nokia Siemens Networks did not fare so well. “It is now clear that NSN was optimistic about customers’ reaction and has found them more hesitant about committing large orders than it had hoped,” he said.

Sales at the networks firm were hit by unusually aggressive pricing in the second quarter – something Ericsson did not appear to suffer from. And its sales were also hit by the management work involved in integrating the two companies. Furthermore, its profits were hit by the mix of lower margin regions and products as well as additional costs from the merger, Garner said.

As a result, the firm has accelerated its cost cutting efforts, bringing forward its target for achieving Eur1.5bn in annual savings to the end of 2008, from 2010 previously.

“For NSN the next year or so will clearly be a difficult transition period that it needs to get through as quickly as possible,” Garner said.

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