Nokia Corp. reported strong sales and profits for the fourth quarter and year end but had a couple of dark spots, namely continued declines in North America and a slipping average selling price of phones.
Net profit for the quarter was Euro 1.3 billion (US$1.7 billion as of Dec. 31, the last day of the reported period), up 19 percent from the same quarter last year. Net sales reached Euro 11.7 billion in the fourth quarter, up 13 percent from Euro 10.3 billion in the corresponding quarter for 2005.
Nokia sold 106 million phones during the quarter, an increase of 26 percent over the year-earlier period. Those sales helped the number-one handset maker to retain a 36 percent market share, up two percentage points from a year earlier.
While the overall results keep Nokia firmly in first place, the phone giant continues to show a couple of weaknesses. Net sales of phones declined significantly in North America, driven by Nokia's exit from the CDMA (Code Division Multiple Access) business and by a lack of acceptance of certain products, Nokia said.
Nokia's average selling price (ASP) per phone continued to decline, as it has for others in the market. Nokia's ASP for the fourth quarter was Euro 89, compared to Euro 93 in the third quarter and Euro 99 in the fourth quarter of 2005. In part, that drop was caused by a lower percentage of sales coming from high-end products, although the decline was offset by stable ASPs in Nokia's entry-level product sales, Nokia said.
Nokia expects to see a continued decline in ASP across the industry due to competitive pressure and the growing importance of emerging markets.
For the full year, net sales rose 20 percent, growing to Euro 41.1 billion from Euro 34.2 billion in 2005. Net profit grew to Euro 4.3 billion, up 19 percent over Euro 3.6 billion in 2005. Nokia gained market share in China, Asia-Pacific and Latin America, while losing share in Europe. The more mature markets, such as Europe, continue to challenge the mobile industry while emerging markets are likely to produce the bulk of sales into the future, Nokia said.