Nokia net profit slides 69 percent

Bloomberg

Net income fell to 576 million euros ($749 billion), or 15 cents a share, from 1.84 billion euros, or 47 cents, a year earlier, the company said yesterday in a statement. Revenue slumped 20 percent to 12.7 billion euros. Analysts had estimated profit of 975 million euros on sales of 13.1 billion euros.

Nokia sold 15 percent fewer phones in the quarter than a year earlier and cut its industry sales forecast for a third time since last quarter. The company previously predicted a 5 percent drop or more. Nokia plans to preserve cash by cutting costs and its dividend as the global economic slump has made consumers more hesitant to replace phones.

"In recent weeks, the macroeconomic environment has deteriorated rapidly, with even weaker consumer confidence, unprecedented currency volatility and credit tightness continuing to impact the mobile communications industry," Chief Executive Officer Olli-Pekka Kallasvuo said in the statement. "We are taking action to reduce overall costs and to preserve our strong capital structure."

The Espoo, Finland-based company proposed slashing its 2008 dividend to 40 cents from 53 cents the previous year. Nokia shares dropped 58 percent last year, its worst annual performance since at least 1992.

Nokia said profitability at its main devices and services unit would be lower in the first half. It forecast an operating margin of more than 10 percent in the first half and between 13 percent and 19 percent in the second half. It had previously predicted the margin would be in the teens for the entire year.

Reducing costs
The company aims to reduce costs at the unit by more than 700 million euros by the end of 2010 on an annualized basis. The fourth-quarter operating margin excluding one-time items was 21.1 percent, down from 22.8 percent a year earlier.

Nokia said its global market share fell to 37 percent in the fourth quarter from 40 percent a year earlier and 38 percent in the previous quarter.

Kallasvuo has said the company is better positioned to face the downturn than its rivals. Nokia has also halted share buybacks and plans to reduce capital spending this year to preserve cash.