Citing strong sales of its new handset models (Nokia 6300, N95 and E65), Nokia reported net revenue of EUR 12.587 billion and diluted EPS of EUR 0.32, excluding special items, growing 39% from Q2 2006. However, Nokia Siemens Networks had a challenging quarter. Some highlights for Q2:
- Nokia device volumes of 100.8 million units, up 11% sequentially and up 29% year on year. Nokia estimated device market share was 38%, up from 36% in Q1 2007 and up from 34% in Q2 2006.
- Nokia now expects industry mobile device volumes in 2007 to grow by 10% or more from the approximately 978 million units Nokia estimate for 2006.
- Nokia device ASP of EUR 90, up from EUR 89 in Q1 2007, however, the company expects this to decline, primarily reflecting the increasing impact of the emerging markets and competitive factors in general.
- Nokia’s year on year market share increase was driven primarily by strong gains in Europe, Middle East & Africa, Asia-Pacific and Latin America. Nokia’s market share in China was at approximately the same level year on year. Nokia had strong sequential market share gains in Europe, Middle East & Africa, China, and Asia-Pacific and to a lesser degree in Latin America. Nokia’s market share was down both year on year and sequentially in North America.
- Nokia Siemens Networks posted Q2 net sales of EUR 3.4 billion. The company said sales were negatively impacted primarily by competition related issues as the price competition in the infrastructure market was unusually aggressive. Net sales were also impacted by challenges related to the start of operations, including delayed purchases by customers to a greater extent than expected, increased management focus on integration, and implementation of the previously announced compliance program, which also required certain management attention.
- Nokia Siemens Networks second quarter operating profit was negative EUR 1.3 billion, with an operating margin of -36.8%.
- Due to the weak performance, Nokia and Nokia Siemens Networks are accelerating and increasing the new company’s annual cost synergies target. The new aim is to achieve the approximate EUR 1.5 billion of annual cost synergies by the end of 2008 rather than by 2010. A further EUR 500 million of annual cost synergies are also being targeted.
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