Nokia reported fourth-quarter sales up 6 percent year-on-year to EUR 12.7 billion, while net profit fell 23 percent to EUR 0.20 per share due to a number of restructuring and intangibles charges. At constant currency rates, group sales were flat year-on-year and up 23 percent from Q3. Operating profit fell to EUR 884 million, from EUR 1.14 billion a year ago, due to lower margins at both Devices & Services and Nokia Siemens Networks. Operating cash flow was up a healthy 93 percent to EUR 2.49 billion. The Devices & Services division performed in line with the company's guidance, with revenues up 4 percent to EUR 8.5 billion thanks to positive currenct effects and a higher ASP. The adjusted operating margin came in line with guidance at 11.3 percent, but operating profit at the division was still down 16 percent year-on-year to EUR 1.0 billion.
Nokia shipped 123.7 million phones in the quarter, down 3 percent year-on-year and up 12 percent sequentially. Nokia said the weak handset volume was due in part to logistics problems and continuing component shortages, and it expects this to last at least through the first quarter. Smartphone sales rose 36 percent from a year ago and were up 7 percent from Q3 to 28.3 million units, but the increase was well short of estimated industry growth of 73 percent year-on-year and 29 percent sequentially. The company had just 31 percent of the smartphone market, versus 40 percent a year ago and 38 percent in Q3. Nokia still improved its average selling price to EUR 69 in Q4, from EUR 64 a year ago and EUR 65 in Q3. That includes revenues from services such as the Ovi Store, which has grown to an average 4 million downloads a day, from 2.7 million in October 2010.
Nokia estimates the overall handset market grew 13 percent in volume last year, while its share fell to 32 percent from 34 in 2009. CEO Stephen Elop said the company had a "solid performance" in Q4 and market growth trends remain "encouraging". However, the company faces "significant challenges" in competitiveness and execution. "In short, the industry changed, and now it's time for Nokia to change faster," he said. Elop held off on announcing any change in strategy, ahead of a planned financial briefing by the company on 11 February. Nokia forecast sales of EUR 6.8-7.3 billion for the first quarter at Devices & Services, and an adjusted operating margin for the group of 7-10 percent, versus 8.6 in Q4.
