15 October 2009

Nokia Posts Loss of €559
Million During The Third quarter

As expected, The Finnish mobile phone giant today reported financial results for the third quarter 2009 with a loss of 559 million euro in the, taking hits from a 20 percent drop in sales and a one-time charge for the fallen value of its network equipment unit.

The Finnish company also booked a euro908 million charge at Nokia Siemens Networks.

The write-down reflects the company's recognition that it won't recover its investment in the joint venture it formed with Siemens AG in 2007 because of more difficult conditions in the industry and likely lower profitability.

The mobile phone industry has been hit hard by the financial crisis, but Nokia said the market outlook is improving. It raised its 2009 forecast for mobile phone volumes, saying it now expects a 7 percent decline from the previous year, rather than the 10 percent fall it had earlier predicted.

"The demand for mobile devices improved in many markets during Q3. With the average selling price of our devices holding firm quarter-on-quarter, our higher device volumes translated into increased net sales in our Devices & Services business. Our volumes and net sales were, however, somewhat constrained by component shortages we encountered across the portfolio. I also want to highlight the good operating expense management that helped the segment deliver solid earnings.

The challenging competitive factors and market conditions in the infrastructure and related services business necessitated non-cash impairment charges at Nokia Siemens Networks. We continue to support Nokia Siemens Networks actions to improve its performance."

THIRD QUARTER 2009 HIGHLIGHTS

• Nokia net sales of EUR 9.8 billion, down 20% year on year and down 1% sequentially (down 19% and flat at constant currency).
• Devices & Services net sales of EUR 6.9 billion, down 20% year on year and up 5% sequentially (down 20% and up 6% at constant currency), and nonIFRS operating margin of 11.4% (18.6% in Q3 2008 and 12.2% in Q2 2009).
• Devices & Services gross margin of 30.9%, down from 34.0% in Q2 2009.
• Services net sales of EUR 148 million (billings of EUR 172 million). Due to the divestment of the security appliance business in April 2009, services net sales are not directly comparable to prior periods.
• Estimated industry mobile device volumes of 288 million units, down 7% year on year and up 7% sequentially.
• Nokia mobile device volumes of 108.5 million units, down 8% year on year and up 5% sequentially.
• Nokia estimated mobile device market share of 38% in Q3 2009, at the same level as in Q3 2008 and in Q2 2009.
• Nokia mobile device ASP of EUR 62, at the same level as in Q2 2009.
• NAVTEQ nonIFRS net sales of EUR 166 million, up 6% year on year and up 12% sequentially, and nonIFRS operating margin of 25.9% (18.5% in Q3 2008).
• Nokia Siemens Networks net sales of EUR 2.8 billion, down 21% year on year and down 14% sequentially (down 20% and down 14% at constant currency), and nonIFRS operating margin of 1.9% (5.1% in Q3 2008).
• Nokia operating cash flow of EUR 720 million.
• Total cash and other liquid assets of EUR 7.4 billion at the end of Q3 2009.