Nokia profits drop 31% during Q2

Nokia’s operating profit dropped 31% during the second quarter due to price competitions.

Operating profit fell 31% to €295m (£249.5m) from €427m (£361.1m) in Q2 2009 as the average selling price of the handsets it sold dipped from €64 a year ago to €61 (£52).

The fall in operating profit comes as the company’s net revenues increased annually by only 1% to €10bn (£8.46bn).

The results have further fuelled speculation over the future of Nokia CEO Olli-Pekka Kallasvuo, who is reportedly under fire in the boardroom due to the company’s loss of market share in the smartphone market.

“Despite facing continuing competitive challenges, we ended the second quarter with several reasons to be optimistic about our future,” said Kallasvuo. “For one, the global handset market has continued to grow at a healthy pace, led by some of the less mature markets where Nokia is strong.”

He added that Nokia will attempt to bolster its fortunes in the smartphone market, where it’s facing increased competition from Apple and handset manufacturers using the Google-owned Android operating system.

“In smartphones, we continue to renew our portfolio,” Kallasvuo said. “We believe the Nokia N8, the first of our Symbian3 devices, will have a user experience superior to that of any smartphone we’ve previously created. It will soon be followed by further Symbian3 phones that we’re confident will give the platform broader appeal and reach, and kick-start our fightback at the higher end of the market.”

Gross profit for Nokia’s devices and services unit decreased 8% to €2.1bn (£1.78bn), compared with €2.2bn in the second quarter of 2009, but the company also said it expected net sales of devices and services to be between €6.7bn and €7.2bn (£5.67bn-6.09bn) in the third quarter.

This story first appeared on NMA

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