Nokia Corp. (NOK) today declared financial results for the third quarter of fiscal 2009. Total revenue of Euro 9.8 billion was a decrease of 19.8% year-over-year as well as down 1% sequentially. The significant decline in year-over-year revenue is the result of the global economic recession and an extremely challenging market environment for the company’s Mobile Devices and Services segment as well as the telecom infrastructure development segment of Nokia Siemens Network.
Net loss in the third quarter was Euro 559 million or a loss of Euro 15 per share, compared to a net income of Euro 1,087 million (an income of Euro 29 per share) in the prior-year quarter. Nokia incurred a massive loss in the reported quarter due to a whopping Euro 1,167 million of non-cash impairment charge. Out of this, Euro 908 million was expensed as the goodwill impairment charges for the Nokia Siemens Network. However, adjusted net income (excluding special items) in the third quarter was Euro 610 million or an income of Euro 17 per share.
Quarterly operating loss was Euro 426 million compared to an operating profit of Euro 1.5 billion in the prior-year quarter and Euro 427 million in the previous quarter. Operating margin in the same quarter was a negative 4.3% compared to 12% in the year-ago quarter and 4.3% in the previous quarter. Excluding non-cash charges, third quarter operating profit was Euro 741 million compared to an operating profit of Euro 1.8 billion in the year-ago quarter Euro 775 million in the previous quarter.
Operating cash flow for the third quarter 2009 was Euro 720 million, compared with Euro 1.3 billion in the prior-year quarter. Total cash and marketable securities were Euro 7.4 billion at Sept. 30, 2009, compared with Euro 7.2 billion at Sept. 30, 2008. At Sept. 30, 2009, Nokia’s net debt-equity ratio was -15%, compared to -18% at Sept. 30, 2008.
Devices & Services Segment
Quarterly revenue was Euro 6.9 billion, down 20% year-over-year but up 5% sequentially. This segment continues to generate the bulk (more than 70%) of total revenue. In the reported quarter, Nokia shipped 108.5 million mobile handsets, down 8% year-over-year but an improvement of 5% sequentially. Average selling price in the same quarter was Euro 62 compared to Euro 72 in the year-ago quarter but remains flat sequentially. Gross margin was 30.9% compared to 34% in the same quarter of the previous year. Operating profit was Euro 785 million down 51% year-over-year.
Nokia Siemens Network Segment
Quarterly revenue was Euro 2.8 billion, down 21% year-over-year and also down 14% sequentially. Gross margin was 28.2% compared to 30.8% in the same quarter of the previous year. Operating loss was Euro 1.2 billion compared to an operating loss of Euro 1 million in the prior-year quarter.
Quarterly revenue was Euro 166 million, up 6.4% year-over-year and also up 13% sequentially. Gross margin was 88% compared to 88.5% in the same quarter of the previous year. Operating loss was Euro 68 million compared to an operating loss of Euro 80 million in the prior-year quarter.
Future Industry Outlook by Management
Nokia announced that shipment of mobile devices will be up sequentially during the fourth quarter, primarily due to Christmas season. The company estimated that it has controlled approximately 38% of the global mobile handset market during the third quarter and also expects to maintain that market share. The average selling price is also expected to remain firm. Management now estimated that mobile handset sales may decline 7% globally year-over-year, compared to its prior estimate of a 10% decline.
Similarly, management upwardly revised its estimate for the Mobile Infrastructure and Fixed Infrastructure and Related Services market from a year-over-year decline of 5% from 10%. However, the company is also expecting that Nokia Siemens Network may lose its share in this market due to severe competition.
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