Nokia reported second-quarter results in line with its reduced targets, with revenues up 1 percent from a year ago to EUR 10.0 billion and EPS falling 40 percent to EUR 0.06. The Devices & Services division posted sales up 3 percent to EUR 6.8 billion, in line with the outlook issued in June for a result at the low end of the earlier guided range of EUR 6.7-7.2 billion. The handset division's adjusted operating margin fell to 9.5 percent from 12.2 percent a year ago, and operating profit including exceptional items tumbled 16 percent to EUR 643 million. Nokia said the adjusted operating margin for the full year is now estimated at 10-11 percent, after the profit warning in June called for a margin at the low end or below the earlier range of 11-13 percent. Nokia said the upside is the market continues to show healthy growth, especially in less-mature markets where the company is strong.
The Finnish group shipped 111.1 million phones in the quarter, up 8 percent from a year ago and up 3 percent from Q1. That was below the estimated market growth of 14 percent year-on-year and 5 percent sequentially. With the market shipping an estimated 338 million phones in the quarter, Nokia's market share was at 33 percent, in line with Q1. Smartphone market share was also stable, at 41 percent, with Nokia shipments up 42 percent year-on-year and 12 percent from Q1 at 24.0 million. Despite the gowth in high-end devices, Nokia's average selling price fell to EUR 61 from EUR 64 a year ago and EUR 62 in Q1, due to price pressure and a higher proportion of lower-priced smartphones. The smartphone ASP fell 21 percent from a year ago to EUR 143. Nokia maintained its outlook for market volumes to grow around 10 percent this year, while its own market share should be unchanged in volume terms and slightly lower in value terms. The company forecast Q3 sales at the Devices & Services division of EUR 6.7-7.2 billion., and an adjusted operating margin of 7-10 percent. The group confirmed that the N8 will start shipping at the end of Q3, to be followed shortly by additional Symbian^3 devices.
The company downgraded its outlook for Nokia Siemens Networks, saying it now expects the network equipment company to maintain its market share in 2010 rather than outpace the market. The market outlook was maintained at flat in euro terms. NSN recorded Q2 sales of EUR 3.0 billion, down 5 percent from a year ago, while the operating loss showed little improvement at EUR 179 million versus EUR 188 million last year. The company blamed the results on delays in orders in India due to the new security regulations there as well as component shortages; both of these situations are expected to improve in Q3. NSN's adjusted operating margin is still forecast at 2 percent for 2010, versus 1.7 in Q2. Sales for Q3 were forecast at EUR 2.7-3.1 billion, with the margin ranging from a negative 2 percent to a positive 2 percent.
At Navteq, sales were up 71 percent from a year earlier to EUR 252 million, benefiting from improved conditions in the automotive industry and growth in mobile device sales. The operating loss decreased to EUR 81 million, compared with EUR 100 million in the second quarter 2009.
