Buffeted by ever more intense competition in the mobile phone market, Nokia saw its earnings fall for the final quarter of 2010.
Net profit for the quarter ended December 31 declined 21 percent to 745 million euros ($1.02 billion), compared with 950 million euros in the year-ago quarter. Sales, though, were on the upswing, reaching 12.6 billion euros ($17.2 billion), a gain of 6 percent from 2009's final quarter.
Nokia attributed the downturn to the heated competition in the mobile phone market as well as various component shortages and challenges meeting supply and demand. The company has been facing a rough climate in the high-end smartphone market as it sheds share to rival players such as Apple and Samsung. But it's also been losing out on the low end to mobile phone makers in China and other emerging countries.
For the quarter, Nokia said that its global slice of the mobile phone market dropped to 31 percent, a decline from its 35 percent share in 2009's fourth quarter but a slight gain from a 30 percent share in the third quarter of 2010. The company sold a total of 123.7 million mobile devices in the fourth quarter, down 3 percent from the prior year. But sales volume for converged mobile devices (smartphones and mobile computers) reached 28.3 million units, a jump of 36 percent from a year ago.
The fourth-quarter results also managed to handily beat the forecasts of analysts polled by Dow Jones Newswires, who were anticipating a 45 percent decline in earnings and only a 3 percent gain in sales.
"In Q4 we delivered solid performance across all three of our businesses, and generated outstanding cash flow," CEO Stephen Elop said in the company's earnings report. "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."
Nokia's profitability was hit hard in 2009, a year when the overall industry was feeling the effects of the global recession. Since then, Nokia has tried to battle back through cost cuts, a reorganization, and staff layoffs.
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