Thursday, January 26, 2006

Nokia in a strong position

Nokia just announced their 4th quarter results for 2005. Revenues for the first time ever hit Euro10 billion for the quarter. But earnings were lower than expected due to weakness in their networks division and lower margins in mobile phone sales as they chased vloumes in lower margin, developing markets.

Nokia’s sales were €10.3bn during the quarter, an increase of 9% year-on-year and ahead of market expectations, while net profits were €1.07bn, a decline of 1%, contrasting analysts’ expectations of an increase of a similar proportion.

The sales for the whole year were €34.1bn, up 16% from 2004, while net profits were €3.6bn, up 13% from 2004. Nokia's share of the handet market held steady at 34%, exactly where they were at end 2004.

So, as Nokia's famous leader, Jorma Ollila, announces his last full year results before handing the reigns over in June and heading off to chair Shell, he has much to be proud of. He hands over a company making record sales and solid earnings. He has transitioned Nokia well in the new multimedia mobile universe and he has held onto their powerful 34% share of the market, even after stiffer than ever competition from Motorola, Samsung and Sony Ericsson in particular.

Now it will be up to Olli-Pekka Kallasvuo, Nokia's new CEO starting June, to continue Ollila's success record and take Nokia into the 21st Century. For there are many challenges to face, with new entrants in the handset market, slower global growth rates, stiffer competition and the convergence of devices. For tomorrow most mobile handsets will behave more like PC's than just phones.

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