3rd Quarter Results - Pt 1

Nokia Corporation
19 October 2001

Part 1


NOKIA                                                   October 19, 2001

Nokia achieves third-quarter profitability targets with
pro forma operating margin of 15.2% and EPS of EUR 0.16

Company continues strong market leadership posting pro forma pre-tax
profit of nearly EUR 1.1 billion and net operating cash flow of 
EUR 1.4 billion

- Third-quarter net sales were EUR 7 050 million, showing a decrease 
of 7% compared with the previous year. In Nokia Networks, net sales 
declined 14% and in Nokia Mobile Phones net sales decreased 3%.
- Pro forma pre-tax profit was EUR 1 068 million.
- Pro forma operating margin for Nokia was 15.2%, Nokia Networks 9.3% 
and Nokia Mobile Phones 19.0%.
- Pro forma earnings per share (diluted) were EUR 0.16 compared
  with EUR 0.19 a year ago.
- Non-cash pro forma adjustments for this quarter totaled EUR 787 
million including a one-time charge of EUR 714 million to increase
reserves for Telsim and Dolphin, resulting in reported net profit of
EUR 186 million and reported EPS (diluted) of EUR 0.04 in the third
quarter.


                                          PRO FORMA
                           (excludes goodwill amortization and non-
                                       recurring items)

EUR (million)         3Q/       3Q/    Change  1-3Q/    1-3Q/  FY 2000
                      2001      2000     (%)    2001     2000
                                         
Net sales            7 050     7 575     -7    22 403  21 092   30 376
Nokia Networks       1 659     1 926    -14     5 577   5 353    7 714
Nokia Mobile Phones  5 269     5 456     -3    16 448  15 178   21 887
Nokia Ventures         140       209    -33       443     613      854
Organization
Operating profit     1 071     1 353    -21     3 648   4 133    5 861
Nokia Networks         155       357    -57       819     993    1 400
Nokia Mobile Phones  1 002     1 069     -6     3 169   3 453    4 897
Nokia Ventures         -72       -60    -20      -267    -203     -307
Organization
Common Group Expenses  -14       -13     -8       -73    -110     -129
Profit before tax    1 068     1 366    -22     3 719   4 175    5 947
and minority 
interests
Net profit             760       923    -18     2 636   2 817    4 027
EPS, EUR                                                            
Basic                 0.16      0.20    -20      0.56    0.60     0.86
Diluted               0.16      0.19    -16      0.55    0.59     0.84


Jorma Ollila, Nokia Chairman and CEO, said: 'Nokia, as a flexible, 
lean and focused organization has done more than just weather the
storm of the past several months. We succeeded in sustaining solid
profitability and high cumulative operating cash flow of EUR 3.9
billion for the first nine months in an intensely competitive and
volatile environment.

'While the market environment has had an inevitable impact on Nokia's
topline growth, we have continued to translate our core strengths of
strong brand, excellence in execution and winning products into
profitable results. In addition, we have not compromised on
investments essential to our future business success. Nokia intends to
remain at the forefront in providing useful and exciting ways for
people to enrich their lives as well as new business opportunities for
the wireless industry as a whole.'


NOKIA IN JULY-SEPTEMBER 2001 (PRO FORMA)
(International Accounting Standards, IAS, pro forma, 
comparisons given to third quarter 2000 results)

Nokia's net sales decreased by 7% to EUR 7 050 million 
(EUR 7 575 million). Sales of Nokia Networks decreased by 14% to 
EUR 1 659 million (EUR 1 926 million), reflecting a continued 
significant slowdown in Europe and somewhat lower sales in 
Asia Pacific, partially offset by an improved performance in the 
Americas. Sales of Nokia Mobile Phones declined by 3% to EUR 5 269 
million (EUR 5 456 million), with growth in Asia Pacific and the US 
offset by a sales decline mainly in Europe and to a lesser extent 
in Latin America. Sales of Nokia Ventures Organization decreased by 
33% and totaled EUR 140 million (EUR 209 million).

Pro forma operating profit decreased by 21% to EUR 1 071 million
(EUR 1 353 million), representing a pro forma operating margin of
15.2% (17.9%). Pro forma operating profit in Nokia Networks decreased
by 57% to EUR 155 million (EUR 357 million), representing a pro forma
operating margin of 9.3% (18.5%). Pro forma operating profit in Nokia
Mobile Phones decreased by 6% to EUR 1 002 million 
(EUR 1 069 million), representing a pro forma operating margin of 
19.0% (19.6%). Nokia Ventures Organization reported a pro forma 
operating loss of EUR 72 million (pro forma operating loss 
of EUR 60 million). Common Group Expenses, which comprises 
Nokia Head Office and Nokia Research Center, totaled EUR 14 million 
(EUR 13 million).

Financial income totaled EUR 6 million (EUR 18 million). Profit before
tax and minority interests was EUR 1 068 million (EUR 1 366 million).
Net profit totaled EUR 760 million (EUR 923 million). Pro forma
earnings per share decreased to EUR 0.16 (basic) and to EUR 0.16
(diluted) compared with EUR 0.20 (basic) and EUR 0.19 (diluted) a year
ago.

Non-cash pro forma adjustments for this quarter reflected (i) the
exclusion of goodwill amortization in the amount of EUR 73 million
(EUR 31 million in the third quarter 2000) and (ii) a one-time charge
of EUR 669 million to increase Nokia's reserves related to a defaulted
financing to Telsim, a cellular operator in Turkey, and EUR 45 million
related to the insolvency of Dolphin in the UK. With these additional
reserves Nokia has now covered its total exposure to Telsim and
Dolphin. Nokia continues to vigorously pursue the recovery of all
amounts due from these companies.

All reported figures can be found on pages 6 and 7 and in the tables
at the end of this report.


BUSINESS ENVIRONMENT AND FORECASTS

During the quarter, Nokia continued to build on leading market
positions in its two main businesses, mobile network infrastructure
and mobile phones.

On the infrastructure side, the ongoing technology transition and
economic instability have led some operators to further postpone
network investments, resulting in lower-than-expected sales for Nokia
Networks in the third quarter. Improved performance in the Americas
was not enough to offset the continued slowdown mainly in Europe.
However, with Nokia's current position in next generation
infrastructure, the company remains confident of reaching its medium-
term 3G market share target of 35%.

In mobile phones, based on Nokia's preliminary estimates, third-
quarter global volume declined by approximately 10% compared with the
third quarter of 2000. Nokia's own mobile phone sales volume declined
by only 3% in the third quarter, versus the previous year.

The global volume decline mainly reflected a demand slowdown in Europe
related to a weak upgrade market. However, the market grew
sequentially from approximately 91 million units in the second quarter
to about 94 million in the third quarter, 2001. Fourth quarter market
volume is expected to be larger than the third quarter, bringing our
estimate for full-year 2001 total market volume to about 390 million
phones.

Nokia now sees market conditions stabilizing and is placing renewed
emphasis on capturing sustainable market share in line with the
company's long-term target of achieving a 40% share of the market.

Future mobile phone market growth will be highly dependent on the rate
at which new products and services are developed and launched as well
as operator strategies. Industry-wide channel inventory has returned
to normal levels. Nokia plans to introduce several new phone models
during the coming months, including some entirely new concept devices.

Nokia sees the fourth quarter, 2001 as stronger than the third
quarter, in terms of sales, profitability and EPS. The company
estimates sequential sales growth of around 20%. Pro forma EPS
(diluted) is expected to be in the range of EUR 0.18 and EUR 0.20
while operating cash flow is expected to remain strongly positive.

Fourth quarter sales for the network business are estimated to show a
sequential increase despite an estimated 20% year-on-year decline. The
network infrastructure market will continue to be challenging
especially for the first quarter, 2002. Despite a continuing lack of
visibility, the company expects network sales in the second half of next year
to be significantly higher than the first half, as sales resulting from
ongoing 3G deliveries start to have an impact from the middle of 2002.

Nokia's competitiveness in terms of future product line-up, brand and
logistics continues to be strong. In mobile phones, sales in the 
fourth quarter are estimated to be  about 25% higher than in the third 
quarter 2001, close to the level of the fourth quarter, 2000.

Based on Nokia's current expectations with respect to product roll-
outs and deliveries for next year, the company continues to believe
revenue growth should pick up again, and at some time during 2002,
return to the level of 25-35%.


JORMA OLLILA, NOKIA CHAIRMAN AND CEO

Nokia, as a flexible, lean and focused organization has done more than
just weather the storm of the past several months. We succeeded in
sustaining solid profitability and high cumulative operating cash flow
of EUR 3.9 billion for the first nine months in an intensely
competitive and volatile environment.

Operator capital expenditure in mobile networks during the third
quarter fell more sharply than we had previously anticipated. However,
with a growing number of subscribers coming onto the networks and the
uptake of GPRS technology we believe operators will need to respond to
quality of service requirements and recommence their capacity
expansion investments in the coming months.

In third generation networks, we grew our market position, signing 
eight agreements during the quarter. We have also commenced volume 
deliveries of commercial 3G equipment, with close to four thousand
base station shipments scheduled for the remainder of this year.
In third generation mobile infrastructure, we believe that we share
the leadership position with our nearest competitor.

In the mobile phone market, one of the drivers of the next growth
period will be packet-switched data. In the new environment of high-
speed data transfer and continuous network access, enabling
technologies such as multimedia messaging will thrive. This will open
up whole new avenues for device and category creation as well as
application and service development, marking a fundamental industry
shift. We believe that a continuous flow of new product designs and
categories, such as the Nokia 5510, launched just last week as an
entertainment content platform, and the advent of color screens, will
build momentum for the next market wave.

While the market environment has had an inevitable impact on Nokia's
topline growth, we have continued to translate our core strengths of
strong brand, excellence in execution and winning products into
profitable results. In addition, we have not compromised on
investments essential to our future business success. Nokia intends to
remain at the forefront in providing useful and exciting ways for
people to enrich their lives as well as new business opportunities for
the wireless industry as a whole.


NOKIA NETWORKS

During the third quarter, reduced investments by some operators
resulted in lower-than-expected year-on-year sales. Concerted efforts
to increase cost efficiencies in the networks business continued, with
further reductions in operating expenditure.

Nokia's accessible market in network infrastructure continues to grow
as operators in the Americas convert from TDMA to GSM, and, as Japan,
Korea, and the US join the WCDMA community. In addition, Nokia signed
GSM expansion deals with four of its customers during the third
quarter and won two new GSM customers in Israel and Saudi Arabia.

In preparation for the 3G products and services takeoff, Nokia began
volume shipments of commercial 3G equipment and is now delivering to
more than 20 customers. In addition to letters of intent in France and
Hong Kong, final contracts were signed with operators in Germany,
Italy, the UK, Sweden, Finland and Japan.

In the Broadband /DSL business, Nokia signed nine new deals, including
five with Chinese operators and a new contract with Skanova in Sweden.

The company continues to focus on key R&D projects. In September,
Nokia acquired Amber Networks, which specializes in fault tolerant
routers. The acquisition complements our existing competency in future
IP-based mobile network technologies. In addition, Nokia signed a
cooperation agreement with TietoEnator to expand its resource base in
its DX200 switching development. Both these moves were in line with
Nokia's long-term R&D strategy of aligning with strong partners while
focussing on strong core capabilities.

In July, in response to the ongoing globalisation of the telecoms
market and consolidation of its customer base, the networks division
realigned its global operations, enabling swifter and more focussed
service, particularly for clients operating in more than one country.


NOKIA MOBILE PHONES

Shipments of Nokia's first GPRS model, the Nokia 8310 (for GSM
900/1800), began at the end of September. The next GPRS models - the
Nokia 6310 (GSM 900/1800) and the Nokia 8390 (GSM 1900) - are
scheduled to start shipping before the end of the year. Nokia
estimates global GPRS terminal market volume in 2001 will reach about
10 million units, but expects GPRS to constitute over 50% of the total
GSM handset market within two years.

In the third quarter, Nokia introduced the Nokia 3395 (GSM 1900), the
first entry-level WAP-enabled GSM handset for the Americas market. The
Nokia 3395, as well as the earlier announced dual-mode Nokia 3320 and
the triple-mode Nokia 3360 for TDMA markets in the Americas, started
shipping during the quarter.

In July, Nokia and Sonera announced that they had started piloting
Multimedia Messaging Services (MMS). The pilot is one of the very
first in the world evaluating end-to-end MMS in a live network
environment.

In September, Nokia launched two products, the Nokia Multimedia
Terminal Gateway and the Nokia Artuse Profile Directory, to enhance
its existing portfolio of WAP and MMS solutions for mobile operators.

Nokia introduced a mobile wallet application for the Nokia 6310 which
enables users to store, amongst others, protected personal information
like credit card details inside their mobile phone. This application
makes use of various mobile commerce solutions, which Nokia is
piloting in collaboration with other industry leaders.

Also in September, Nokia, Nordea and Visa International began joint
testing to verify how real life electronic commerce can be conducted
over mobile phones. The Electronic Mobile Payment Services (EMPS)
solution aims to develop functional technology that will allow
consumers to use their mobile handset as an electronic wallet.
Together with IBM, Luottokunta and Radiolinja, Nokia is also piloting
the usage of the mobile wallet with single-chip SIM/WIM (Wireless
Identity Module) technology that ensures safe transactions.

Nokia participated in two significant industry alliance announcements
during the quarter; the co-founding of the Liberty Alliance Project to
create an open, standards-based solution for network identity and
authentication, and the successful demonstration of the world's first
interoperable mobile instant messaging and presence service. The
demonstration was an important milestone in developing the Wireless
Village specification, pioneered by Nokia, Motorola and Ericsson.

Nokia and a number of its industry peers launched the Mobile Games
Interoperability (MGI) Forum, which will work to define a mobile games
interoperability specification, enabling game developers to produce
and deploy mobile games for different mobile devices that can be
distributed across multiple game servers and wireless networks.


NOKIA VENTURES ORGANIZATION

Nokia announced the Nokia IP71 which aims to provide small office
network environments and distributed enterprises with a simple, cost-
effective means to deploy a single Internet security device offering
both VPN and firewall functionality. In addition, the company
introduced, the Nokia IP740 security appliance for corporate data
centers and business critical service provider network environments.

Nokia signed a two-year OEM license and reseller agreement with F5
Networks for its full suite of Internet traffic and content management
software products. The company also introduced a new set of advanced
features, including smart card functionality, for its leading VPN
portfolio.

Nokia Home Communications introduced to Sweden its Mediaterminal
product category, an 'all-in-one product' for the next generation of
digital TV. Sweden is the first country in the world to have the
product available.

In IBC (International Broadcasting Convention), Nokia and 10 of
Europe's leading companies in the field of broadcasting, multimedia
and communications announced a Memorandum of Understanding to promote
the use of digital broadcast standards for the delivery of multimedia
content using Internet Protocol standards.


NOKIA IN JULY-SEPTEMBER 2001 (REPORTED)
(International Accounting Standards, IAS, 
comparisons given to third-quarter 2000 results)

Nokia's net sales decreased by 7% to EUR 7 050 million (EUR 7 575
million). Sales of Nokia Networks decreased by 14% to EUR 1 659
million (EUR 1 926 million), reflecting a continued significant
slowdown in Europe and somewhat lower sales in Asia Pacific, partially
offset by an improved performance in the Americas. Sales of Nokia
Mobile Phones declined by 3% to EUR 5 269 million (EUR 5 456 million),
with growth in Asia Pacific and the US offset by a sales decline
mainly in Europe and to a lesser extent in Latin America. Sales of
Nokia Ventures Organization decreased by 33% and totaled EUR 140
million (EUR 209 million).

Operating profit decreased by 79% to EUR 284 million (EUR 1 322
million), representing an operating margin of 4.0% (17.5%). Operating
profit in Nokia Networks decreased to a loss of EUR 585 million
(operating profit of EUR 349 million), representing an operating
margin of -35.3% (+18.1%). Nokia made a one-time charge of EUR 714
million to cover Nokia Networks receivables by EUR 669 million related
to a defaulted financing to Telsim, a cellular operator in Turkey, and
EUR 45 million related to the insolvency of Dolphin in the UK. With
these additional amounts Nokia has now covered against its total
exposure to Telsim and Dolphin. Nokia continues to vigorously pursue
the recovery of all amounts due from these companies.

Operating profit in Nokia Mobile Phones decreased by 8% to EUR 979
million (EUR 1 068 million), representing an operating margin of 18.6%
(19.6%). Nokia Ventures Organization reported an operating loss of 
EUR 96 million (operating loss of EUR 82 million). 
Common Group Expenses, which comprises Nokia Head Office and 
Nokia Research Center, totaled EUR 14 million (EUR 13 million).

Financial income totaled EUR 6 million (EUR 18 million). Profit before
tax and minority interests was EUR 281 million (EUR 1 335 million).
Net profit totaled EUR 186 million (EUR 892 million). Earnings per
share decreased to EUR 0.04 (basic) and to EUR 0.04 (diluted) compared
with EUR 0.19 (basic) and EUR 0.19 (diluted).

At the end of September, Nokia had vendor financing commitments based
on customer agreements totaling EUR 4 172 million, of which
outstanding long-term receivables and guarantees totaled EUR 916
million. These amounts exclude the fully provided Telsim and Dolphin
receivables.

During the third quarter, Nokia continued to focus on its core
competencies and entered into several new outsourcing arrangements,
most notably, a product development partnership between Nokia Networks
and TietoEnator and an IT service agreement with Hewlett Packard.

At the end of September, 2001, Nokia had 56 145 employees. The average
number of employees during the first nine months of 2001 was 58 763.
In October, Nokia Mobile Phones started employment negotiations
regarding approximately 260 full-time employees in Salo in Finland.

Effective August 29, a total of 2 532 000 Nokia shares held by Nokia
Corporation were transferred to stockholders of Amber Networks, Inc.
The shares were transferred as part of the acquisition price Nokia
paid for acquiring Amber. The transfer price was EUR 20.771 per share,
which was based on the market value of Nokia share. The aggregate par
value of these shares was EUR 151 920 and they represented
approximately 0.05% of the share capital of the company and the total
voting rights. This transfer did not have any significant effect on
the relative holdings of the other shareholders of the company or on
the voting powers among them. On September 30, the Group companies
owned 2 135 087 Nokia shares. The shares had an aggregate par value of
EUR 128 105 22 representing approximately 0.05% of the share capital
of the company and the total voting rights.


NOKIA IN JANUARY-SEPTEMBER 2001 (REPORTED)
(International Accounting Standards, IAS, 
comparisons given to the January-September 2000 results)

Nokia's net sales increased by 6% to EUR 22 403 million (EUR 21 092
million). Sales of Nokia Networks increased by 4% to EUR 5 577 million
(EUR 5 353 million). Sales of Nokia Mobile Phones grew by 8% to 
EUR 16 448 million (EUR 15 178 million). Sales of Nokia Ventures 
Organization decreased by 28% and totaled EUR 443 million 
(EUR 613 million).    

Operating profit decreased by 38% to EUR 2 509 million (EUR 4 050
million), representing an operating margin of 11.2% (19.2%). Operating
profit in Nokia Networks decreased to EUR 0 million (EUR 970 million),
representing an operating margin of 0.0% (18.1%). Operating profit in
Nokia Mobile Phones decreased by 11% to EUR 3 064 million (EUR 3 450
million), representing an operating margin of 18.6% (22.7%). Nokia
Ventures Organization reported an operating loss of EUR 482 million
(operating loss of EUR 260 million). Common Group Expenses, which
comprises Nokia Head Office and Nokia Research Center, totaled EUR 73
million (EUR 110 million).

Financial income totaled EUR 80 million (EUR 51 million). Profit
before tax and minority interests was EUR 2 580 million (EUR 4 092
million). Net profit totaled EUR 1 750 million (EUR 2 734 million).
Earnings per share decreased to EUR 0.37 (basic) and to EUR 0.37
(diluted) compared with EUR 0.59 (basic) and EUR 0.57 (diluted).

At September 30, 2001, net debt-to-equity ratio (gearing) was -28% 
(-26% at the end of 2000). During the January to September 
period 2001, capital expenditures amounted to EUR 820 million 
(EUR 1 171 million).

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