Nokia latest victim of credit crunch

The world’s biggest handset vendor, Nokia, has not escaped unscathed as the credit crunch takes its toll on global handset sales.

The Finnish firm is the latest big vendor to report disappointing handset shipments during the fourth quarter, with number dropping 15 per cent year on year to 113.1 million, and falling from 117.8 million shipments in the third quarter of 2008.

Overall, fourth quarter net sales at the firm were down 19.5 per cent year on year to Eur12.6bn, with full year revenues coming in almost flat compared to 2007, at Eur50bn.

Net profit for the fourth quarter totalled Eur576m, down from Eur1.8bn in the same period a year earlier.

Nokia chief executive, Olli-Pekka Kallasvuo, said: “In recent weeks, the macroeconomic environment has deteriorated rapidly, with even weaker consumer confidence, unprecedented currency volatility and credit tightness continuing to impact the mobile communications industry. We are taking action to reduce overall costs and to preserve our strong capital structure. This is clearly our top priority in the current economic environment.”

The company estimates that its mobile device market share dropped to 37 per cent in Q4, down from 40 per cent in Q4 2007 and down from 38 per cent in Q3 2008. The average selling price (ASP) of a device held fast held fast however, at Eur71, down from Eur72 in the third quarter 2008.

Nokia now expects 2009 industry mobile device volumes to decline approximately 10 per cent from 2008 levels, with a greater decline in the first half than in the second half of the year.

On the networks side, revenues fell 5.3 per cent year on year to Eur4.3bn in the fourth quarter.

In other news, Friday morning was the official launch of Nokia’s first touchscreen device, the 5800 XpressMusic, also known as the ‘Tube’. The device costs £249 before operator subsidies.

The 5800 boasts a full VGA, 3.2″ widescreen display, with a 16 by 9 aspect ratio and 30 frames-per-second playback. Taking advantage of touchscreen technology, Nokia has streamlined the user interface to make use of commonly accessed applications and contacts, as well as the Ovi platform and of course the Nokia Music Store.

Under the hood there is HSDPA connectivity, GPS, 8GB memory, a 3.5mm jack and surround sound stereo speakers as well as a 3.2 megapixel camera. The web browser notably supports Flash Lite 3.

But when telecoms.com wandered past the Nokia store on Regent Street Friday morning, there was a noticeable absence of eager consumers lining up outside.