Nokia posted a 25-percent uptick in its first-quarter profits, and reiterated its expectation that mobile handset unit shipments would rise by 10 percent globally this year.
"We had strong profitability, even with the seasonal drop in sales," Nokia CEO Olli-Pekka Kallasvuo told investors. "The overall device market developed as expected, with the greatest demand in emerging markets, where our position is very strong."
However, Nokias $1.94 billion profit failed to live up to Wall Street expectations. Moreover, investors were less than pleased about certain aspects of the companys outlook for the remainder of this year.
CURRENCY WOES
Kallasvuo attempted to downplay Nokias expectation that the mobile device market would decline in value this year due to the negative impact of the recently weakened U.S. dollar. "In fact," he said, "the market is expected to clearly grow in value terms on a constant currency basis, according to our estimates."
Kallasvuo also noted a downside to the fact that the mobile market this year looks similar in many ways to 2007 -- when industry growth was driven by sales in emerging markets such as India, China, Brazil and Africa. Because of this, Nokia expects to see some decline in industry-average selling prices this year, "primarily to reflect the increasing impact of the emerging markets, and competitive factors in general," Kallasvuo explained.
For its part, tech research and advisory firm Gartner sees the looming recession in Western Europe and North America -- together with increased food prices in emerging markets -- possibly impacting the overall value of the mobile device market. "This means that in mature markets, consumers might be choosing mid-tier devices over high-end devices," noted Carolina Milanesi, Gartners research director.
"We were expecting replacement sales in emerging countries to famously impact average selling prices (ASPs), possibly offsetting the trend in mature markets," Milanesi said. "The recent developments with food prices, however, might change things and negatively impact replacement sales, which the overall results of lowering ASPs and revenues more than anticipated," she explained.
Milanesi also warned that Motorola -- which is more dependent on the U.S. market -- might suffer more from the dollars slide than other players with stronger shares in other world regions. "Back in the fourth quarter, the U.S. was the only market where Motorola was able to still have a reasonable share," she said.
GRABBING MARKET SHARE
According to Nokias internal estimates, the handset-makers global market share was up 3 points year-on-year at the end of the first quarter, and down by less than 1 percent sequentially. The company also predicted that its handset shipments during the quarter now under way would be up slightly on a sequential basis, and that its share of the global mobile device market would rise.
"We intend to take share in the second quarter, as we continue to benefit from our strong presence in the fastest-growing parts of the market," Kallasvuo noted. "We also see signs of positive growth momentum in most of our key regions," he said.
Milanesi said Kallasvuos predictions were in line with Gartners own expectations. "We do expect the second quarter to be marginally up over the first, as normal seasonality calls for, and we expect Nokia to continue to grow market share," she observed.
Though Nokia will not be shipping any major new models in the current quarter, Kallasvuo is not concerned. "We expect a number of new products to have a positive impact on our results in the second half of 2008," he said.
"We had strong profitability, even with the seasonal drop in sales," Nokia CEO Olli-Pekka Kallasvuo told investors. "The overall device market developed as expected, with the greatest demand in emerging markets, where our position is very strong."
However, Nokias $1.94 billion profit failed to live up to Wall Street expectations. Moreover, investors were less than pleased about certain aspects of the companys outlook for the remainder of this year.
CURRENCY WOES
Kallasvuo attempted to downplay Nokias expectation that the mobile device market would decline in value this year due to the negative impact of the recently weakened U.S. dollar. "In fact," he said, "the market is expected to clearly grow in value terms on a constant currency basis, according to our estimates."
Kallasvuo also noted a downside to the fact that the mobile market this year looks similar in many ways to 2007 -- when industry growth was driven by sales in emerging markets such as India, China, Brazil and Africa. Because of this, Nokia expects to see some decline in industry-average selling prices this year, "primarily to reflect the increasing impact of the emerging markets, and competitive factors in general," Kallasvuo explained.
For its part, tech research and advisory firm Gartner sees the looming recession in Western Europe and North America -- together with increased food prices in emerging markets -- possibly impacting the overall value of the mobile device market. "This means that in mature markets, consumers might be choosing mid-tier devices over high-end devices," noted Carolina Milanesi, Gartners research director.
"We were expecting replacement sales in emerging countries to famously impact average selling prices (ASPs), possibly offsetting the trend in mature markets," Milanesi said. "The recent developments with food prices, however, might change things and negatively impact replacement sales, which the overall results of lowering ASPs and revenues more than anticipated," she explained.
Milanesi also warned that Motorola -- which is more dependent on the U.S. market -- might suffer more from the dollars slide than other players with stronger shares in other world regions. "Back in the fourth quarter, the U.S. was the only market where Motorola was able to still have a reasonable share," she said.
GRABBING MARKET SHARE
According to Nokias internal estimates, the handset-makers global market share was up 3 points year-on-year at the end of the first quarter, and down by less than 1 percent sequentially. The company also predicted that its handset shipments during the quarter now under way would be up slightly on a sequential basis, and that its share of the global mobile device market would rise.
"We intend to take share in the second quarter, as we continue to benefit from our strong presence in the fastest-growing parts of the market," Kallasvuo noted. "We also see signs of positive growth momentum in most of our key regions," he said.
Milanesi said Kallasvuos predictions were in line with Gartners own expectations. "We do expect the second quarter to be marginally up over the first, as normal seasonality calls for, and we expect Nokia to continue to grow market share," she observed.
Though Nokia will not be shipping any major new models in the current quarter, Kallasvuo is not concerned. "We expect a number of new products to have a positive impact on our results in the second half of 2008," he said.
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