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Nokia's Q4 operating margin better than Q3, but its market share slips with 2% in 2010

Posted: , by Daniel P.

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Nokia's Q4 operating margin better than Q3, but its market share slips with 2% in 2010
Nokia just announced its fourth quarter and full year 2010 results. As expected with the introduction of higher-end smartphones like the Nokia N8, and Nokia C7, the operating margin in its "Devices&Services" division received a slight bump to 12% in Q4, compared to 11.3% in Q3, but was lower than the 14.9% of Q4 in 2009.

This is largely thanks to the increase of the average selling price of a Nokia handset to $94 (69 EUR) from $88 (65 EUR) in Q3. This operating margin is in line with what the others are making, with the notable exception of Apple, whose margin is huge. Nokia also diminished its market share in the mobile industry in 2010 to 32%, from 34% in 2009, according to its own calculations. Thanks to the large volumes of basic handsets they sell, like the Nokia C3, which made the company number one in QWERTY phones sales last quarter, the Finns are still the largest cell phone manufacturer in the world, although the second Samsung threatened to change that by 2014.

Nokia now sees 4 million downloads a day from its Ovi application store, and it also expanded its Ovi Maps service to 180 countries total, in 100 of which Nokia offers free voice-guided navigation. Still, in the end the bottomline is what really matters, and Nokia has managed to eke out $1.2 billion of operating profit (884 million EUR) of profits for the full 2010, a 23% decrease from 2009.

Compare that to the $6 billion net profit Apple made in just Q4, and you get the picture. Going forward Nokia predicts even lower operating margins for the January-March period of this year - between 7 and 10%, which is explicable, considering no interesting handsets are hitting the market from the Finns in that period. Nevertheless the new CEO Stephen Elop seems firmly decided to turn the ship around:

"In Q4 we delivered solid performance across all three of our businesses, and generated outstanding cash flow. Additionally, growth trends in the mobile devices market continue to be encouraging. Yet, Nokia faces some significant challenges in our competitiveness and our execution. In short, the industry changed, and now it's time for Nokia to change faster."

The company will be holding a press event on February 11th in London, where it will reveal its strategy going forward.

source: Nokia

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posted on 27 Jan 2011, 07:21

1. achilles (Posts: 54; Member since: 27 May 2010)


Dear Nokia, I understand that in the USA you mostly put out low end devices among the major cellular carriers, making most of your money through quantity selling of low end devices. You can keep doing this strategy, as it's making you wealthy, however, you also need some high end phones on the major carriers in the USA to remind people that you also can make awesome devices.

posted on 27 Jan 2011, 08:35

2. bluechris (unregistered)


achillies - the issue in the US i think is that nokia is less willing to spend time and energy customizing devices so providers here can have the "exclusives" they all seem to want. Everywhere else the exact same handset is sold by many providers in the same market - but how many variations on e.g Samsung Galaxy for example, are there. It sounds like they did have a few devices coming for AT&T and T-Mobile and they pulled the AT&T one, and T-Mobile dropped one - possible reasons mentioned in the articles on this website in which this was reported. However, yes, ultimately this does need to happen sooner or later and it's a shame nothing was worked out for the N8. I wonder if Nokia want to maximize sales by refusing any sort of exclusivity and wanting both GSM carriers to pick up the devices, or if it's a question of not trusting carriers to have any control over OTA updates rather than them come right from Nokia (AT&T and T-Mobile have been slow to update Android devices to new firmware).

Ultimately though, something needs to change and nokia does need to get some higher end devices in to US carries and both them and the carrier back it with realistic pricing and a solid marketing campaign. They also need to convince carriers Android isn't the only thing worth promoting - T-Mobile especially has been a heavy android promoter since launch of the G1, but also has always been willing to carry a variety of Nokia phones.

Hopefully the N9, E7 and X7, or some phone announced during MWC, will be picked up by someone here.

posted on 27 Jan 2011, 09:06

3. CrazyGPU (unregistered)


I think Nokia should do as Motorola, trying to capture the atention with the latest hardware, embracing new operating sistems, and not flooding the market with mostly prehistorical devices and SOs. Nokia is a great brand. The products should be great too. But having a flagship like N8 with a slow processor wont be helping nokia fighting against Tegra 2 high end phones with android or the new iphones.

posted on 27 Jan 2011, 17:03

4. thatdude1 (unregistered)


Nokia is on the right track to increasing operating profits. And with the advent of MeeGo and the Symbian updates around the corner, Nokia will soon regain any lost market share. All you naysayers, please jump off and stop "predicting" their downfall. It's not gonna happen.

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