Nokia Q3 2008 net sales EUR 12.2 billion, non-I...
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Non-IFRS gross margin 35.7%, up from 34.5 % in Q3 2007 (reported
35.6%, up from 34.2% in Q3 2007)
Nokia Corporation
Interim report
October 16, 2008 at 13.00 (CET +1)
The complete press release with tables is available at
http://www.nokia.com/results/results2008Q3e.pdf.
+-------------------------------------------------------------------+
| | Reported third quarter 2008 results1 |
|-------------------+-----------------------------------------------|
| | | | YoY | | QoQ |
| EUR million | Q3/2008 | Q3/2007 | Change | Q2/2008 | Change |
|-------------------+---------+---------+--------+---------+--------|
| Net sales | 12 237 | 12 898 | -5% | 13 151 | -7% |
|-------------------+---------+---------+--------+---------+--------|
| Devices & | | | | | |
| Services | 8 605 | 9 238 | -7% | 9 090 | -5% |
|-------------------+---------+---------+--------+---------+--------|
| NAVTEQ | 156 | | | | |
|-------------------+---------+---------+--------+---------+--------|
| Nokia Siemens | | | | | |
| Networks | 3 503 | 3 674 | -5% | 4 067 | -14% |
|-------------------+---------+---------+--------+---------+--------|
| | | | | | |
|-------------------+---------+---------+--------+---------+--------|
| Operating profit | 1 469 | 1 862 | -21% | 1 474 | 0% |
|-------------------+---------+---------+--------+---------+--------|
| Devices & | | | | | |
| Services | 1 602 | 1 959 | -18% | 1 565 | 2% |
|-------------------+---------+---------+--------+---------+--------|
| NAVTEQ | -80 | | | | |
|-------------------+---------+---------+--------+---------+--------|
| Nokia Siemens | | | | | |
| Networks | -1 | -120 | | -47 | |
|-------------------+---------+---------+--------+---------+--------|
| | | | | | |
|-------------------+---------+---------+--------+---------+--------|
| Operating margin | 12.0% | 14.4% | | 11.2% | |
|-------------------+---------+---------+--------+---------+--------|
| Devices & | | | | | |
| Services | 18.6% | 21.2% | | 17.2% | |
|-------------------+---------+---------+--------+---------+--------|
| NAVTEQ | -51.3% | | | | |
|-------------------+---------+---------+--------+---------+--------|
| Nokia Siemens | | | | | |
| Networks | 0.0% | -3.3% | | -1.2% | |
|-------------------+---------+---------+--------+---------+--------|
| | | | | | |
|-------------------+---------+---------+--------+---------+--------|
| EPS, EUR Diluted | 0.29 | 0.40 | -28% | 0.29 | 0% |
|-------------------+---------+---------+--------+---------+--------|
| | | | | | |
|-------------------+-----------------------------------------------|
| | Non-IFRS third quarter 2008 results1, 2 |
|-------------------+-----------------------------------------------|
| | | | YoY | | QoQ |
| EUR million | Q3/2008 | Q3/2007 | Change | Q2/2008 | Change |
|-------------------+---------+---------+--------+---------+--------|
| Net sales | 12 239 | 12 927 | -5% | 13 155 | -7% |
|-------------------+---------+---------+--------+---------+--------|
| Devices & | | | | | |
| Services | 8 605 | 9 238 | -7% | 9 090 | -5% |
|-------------------+---------+---------+--------+---------+--------|
| NAVTEQ | 157 | | | | |
|-------------------+---------+---------+--------+---------+--------|
| Nokia Siemens | | | | | |
| Networks | 3 504 | 3 703 | -5% | 4 071 | -14% |
|-------------------+---------+---------+--------+---------+--------|
| | | | | | |
|-------------------+---------+---------+--------+---------+--------|
| Operating profit | 1 756 | 2 032 | -14% | 2 054 | -15% |
|-------------------+---------+---------+--------+---------+--------|
| Devices & | | | | | |
| Services | 1 602 | 1 959 | -18% | 1 824 | -12% |
|-------------------+---------+---------+--------+---------+--------|
| NAVTEQ | 29 | | | | |
|-------------------+---------+---------+--------+---------+--------|
| Nokia Siemens | | | | | |
| Networks | 177 | 110 | 61% | 274 | -35% |
|-------------------+---------+---------+--------+---------+--------|
| | | | | | |
|-------------------+---------+---------+--------+---------+--------|
| Operating margin | 14.3% | 15.7% | | 15.6% | |
|-------------------+---------+---------+--------+---------+--------|
| Devices & | | | | | |
| Services | 18.6% | 21.2% | | 20.1% | |
|-------------------+---------+---------+--------+---------+--------|
| NAVTEQ | 18.5% | | | | |
|-------------------+---------+---------+--------+---------+--------|
| Nokia Siemens | | | | | |
| Networks | 5.1% | 3.0% | | 6.7% | |
|-------------------+---------+---------+--------+---------+--------|
| | | | | | |
|-------------------+---------+---------+--------+---------+--------|
| EPS, EUR Diluted | 0.33 | 0.41 | -20% | 0.37 | -11% |
+-------------------------------------------------------------------+
Note 1 relating to NAVTEQ: On July 10, 2008, Nokia completed the
acquisition of NAVTEQ Corporation. The map data business of NAVTEQ is
a separate reportable segment of Nokia starting from the third
quarter 2008. Accordingly, the results of NAVTEQ are not available
for the prior periods.
Note 2 relating to non-IFRS results: Non-IFRS results exclude special
items for all periods. In addition, non-IFRS results exclude
intangible asset amortization, other purchase price accounting
related items and inventory value adjustments arising from the
formation of Nokia Siemens Networks and from all business
acquisitions completed after June 30, 2008. For the preceding
periods, non-IFRS results exclude such items and adjustments arising
from the formation of Nokia Siemens Networks only. More specific
information about the exclusions from the non-IFRS results may be
found on pages 2 and 3 of this press release.
Nokia believes that these non-IFRS financial measures provide
meaningful supplemental information to both management and investors
regarding Nokia's performance by excluding the above-described items
that may not be indicative of Nokia's business operating results.
These non-IFRS financial measures should not be viewed in isolation
or as substitutes to the equivalent IFRS measure(s), but should be
used in conjunction with the most directly comparable IFRS measure(s)
in the reported results.
A reconciliation of the non-IFRS results to our reported results for
Q3 2008 and Q3 2007 can be found in the tables on pages 12-16 of this
press release.
THIRD QUARTER 2008 HIGHLIGHTS
- Nokia net sales of EUR 12.2 billion, down 5% year on year and down
7% sequentially (up 1% and down 7% at constant currency).
- Devices & Services net sales of EUR 8.6 billion, down 7% year on
year and down 5% sequentially (down 1% and 5% at constant currency).
- Services and software net sales of EUR 115 million (billings of EUR
140 million).
- Estimated industry mobile device volumes of 310 million units, up
8% year on year and up 2% sequentially.
- Nokia mobile device volumes of 117.8 million units, up 5% year on
year and down 3% sequentially.
- Nokia estimated mobile device market share of 38%, down from 39% in
Q3 2007 and down from 40% in Q2 2008.
- Nokia mobile device ASP of EUR 72, down from EUR 74 in Q2 2008.
- Devices & Services gross margin of 36.5% up sequentially from 36.1%
in Q2 2008.
- NAVTEQ net sales of EUR 156 million and non-IFRS operating margin
of 18.5%.
- Nokia Siemens Networks net sales of EUR 3.5 billion, down 5% year
on year and down 14% sequentially (flat and down 14% at constant
currency).
- Total cash and other liquid assets of EUR 7.2 billion at the end of
Q3 2008.
OLLI-PEKKA KALLASVUO, NOKIA CEO:
"As a result of our strong operational management and market
position, Nokia was able to achieve solid margins and operating cash
flow of 1.3 billion euros for the third quarter of 2008. With our
scale, brand, improving product portfolio and low cost structure, we
believe Nokia is well positioned for the current times."
INDUSTRY AND NOKIA OUTLOOK
- Nokia expects industry mobile device volumes in the fourth quarter
2008 to be up sequentially.
- Nokia expects its mobile device market share in the fourth quarter
2008 to be at the same level or slightly up sequentially.
- Nokia expects industry mobile volume will be approximately 1.26
billion in 2008, up from approximately 1.14 billion units Nokia
estimated for 2007.
- Nokia continues to target an increase in its market share in mobile
devices in 2008.
- Nokia and Nokia Siemens Networks continue to target for Nokia
Siemens Networks market share to remain constant in 2008, compared to
2007.
- Nokia and Nokia Siemens Networks continue to expect the mobile
infrastructure and fixed infrastructure and related services market
to be flat in Euro terms in 2008, compared to 2007.
- Nokia and Nokia Siemens Networks continued cost synergy target for
Nokia Siemens Networks is to achieve substantially all of the EUR 2.0
billion of targeted annual cost synergies by the end of 2008, as
previously announced.
Q3 2008 FINANCIAL HIGHLIGHTS
(Comparisons are given to the third quarter 2007 results, unless
otherwise indicated.)
The non-IFRS results exclusions
Q3 2008 - EUR 287 million consisting of:
- EUR 59 million restructuring charge and other one-time items in
Nokia Siemens Networks.
- EUR 119 million of intangible asset amortization and other purchase
price accounting related items arising from the formation of Nokia
Siemens Networks.
- EUR 109 million of intangible asset amortization and other purchase
price accounting related items arising from the acquisition of
NAVTEQ.
Q2 2008 - EUR 580 million consisting of:
- EUR 259 million of charges related to closure of the Bochum site in
Germany.
- EUR 201 million restructuring charge and other one time items.
- EUR 120 million of intangible asset amortization and other purchase
price accounting related items arising from the formation of Nokia
Siemens Networks
Q3 2007 - EUR 170 million (net) consisting of:
- EUR 86 million restructuring charge and other one-time items in
Nokia Siemens Networks.
- EUR 60 million gain on sale of real estate.
- EUR 144 million of intangible asset amortization and other purchase
price accounting related items arising from the formation of Nokia
Siemens Networks.
Non-IFRS results exclude special items for all periods. In addition,
non-IFRS results exclude intangible asset amortization, other
purchase price accounting related items and inventory value
adjustments arising from the formation of Nokia Siemens Networks and
from all business acquisitions completed after June 30, 2008. For the
preceding periods, non-IFRS results exclude such items and
adjustments arising from the formation of Nokia Siemens Networks
only.
Nokia Group
Nokia's third quarter 2008 net sales decreased 5% to EUR 12.2
billion, compared with EUR 12.9 billion in the third quarter 2007. At
constant currency, group net sales would have increased 1% year on
year and decreased 7% sequentially.
The following chart sets out the year on year and sequential growth
rates in our net sales on a reported basis and at constant currency
for the periods indicated.
+-------------------------------------------------------------------+
| NOKIA THIRD QUARTER 2008 NET SALES |
|-------------------------------------------------------------------|
| Reported & Constant Currency1,2 |
|-------------------------------------------------------------------|
| | Q3/2008 vs. | Q3/2008 vs. |
| | Q3/2007 Change | Q2/2008 Change |
|--------------------------------+----------------+-----------------|
| Group net sales - reported | -5% | -7% |
|--------------------------------+----------------+-----------------|
| Group net sales - constant | | |
| currency1 | 1% | -7% |
|--------------------------------+----------------+-----------------|
| | | |
|--------------------------------+----------------+-----------------|
| Devices & Services net sales - | | |
| reported | -7% | -5% |
|--------------------------------+----------------+-----------------|
| Devices & Services net sales - | | |
| constant currency1 | -1% | -5% |
|--------------------------------+----------------+-----------------|
| | | |
|--------------------------------+----------------+-----------------|
| Nokia Siemens Networks net | | |
| sales - reported | -5% | -14% |
|--------------------------------+----------------+-----------------|
| Nokia Siemens Networks net | | |
| sales - constant currency1 | 0% | -14% |
+-------------------------------------------------------------------+
Note 1: Change in net sales at constant currency excludes the impact
of changes in exchange rates in comparison to the Euro, our reporting
currency.
Note 2: On July 10, 2008, Nokia completed the acquisition of NAVTEQ
Corporation. The map data business of NAVTEQ is a separate reportable
segment of Nokia starting from the third quarter 2008. Accordingly,
the results of NAVTEQ are not available for the prior periods.
Nokia's third quarter 2008 reported operating profit decreased 21% to
EUR 1.5 billion, compared with EUR 1.9 billion in the third quarter
2007. Nokia's third quarter 2008 non-IFRS operating profit decreased
14% to EUR 1.8 billion, compared with EUR 2.0 billion in the third
quarter 2007. Nokia's third quarter 2008 reported operating margin
was 12.0% (14.4%). Nokia's third quarter 2008 non-IFRS operating
margin was 14.3% (15.7%).
Operating cash flow for the third quarter 2008 was EUR 1.3 billion,
compared with EUR 2.0 billion for the third quarter 2007, and total
cash and other liquid assets were EUR 7.2 billion at September 30,
2008, compared with EUR 11.8 billion at December 31, 2007. At
September 30, 2008, our net debt-equity ratio (gearing) was -18%,
compared with -62% at December 31, 2007.
On July 24, 2008, Nokia and Qualcomm entered into a new agreement
covering various current and future standards and other technologies,
and resulting in a settlement of all litigation between the
companies. Under the terms of the 15 year agreement, Nokia has been
granted a license under all Qualcomm's patents for use in Nokia's
mobile devices and Nokia Siemens Networks infrastructure equipment.
As previously communicated, the financial terms also included a
lump-sum cash payment. The payment amounts to EUR 1.7 billion and is
payable by Nokia to Qualcomm during the fourth quarter 2008. The
lump-sum payment made to Qualcomm will be expensed quarterly over the
term of the agreement. As a result of the agreement with Qualcomm and
certain other license agreements concluded during the third quarter
2008, Nokia incurred a slightly positive impact to its gross margin
during the quarter, as the royalty provisions earlier recorded well
covered the related obligations.
Devices & Services
In the third quarter 2008, the total mobile device volume of our
Devices & Services group reached 117.8 million units, representing
5.5% year on year growth and a 3% sequential decrease. The overall
industry mobile device volume for the same period reached 310 million
units based on Nokia's estimate, representing 8% year on year growth
and a 2% sequential increase.
Of the total industry mobile device volumes, converged mobile device
industry volumes in the third quarter 2008 increased to 44.2 million
units, based on Nokia's estimate, compared with an estimated 31.7
million units in the third quarter 2007. Our own converged mobile
device volumes were 15.5 million units in the third quarter 2008,
compared with 16.0 million units in the third quarter 2007. We
shipped almost 9 million Nokia Nseries and 3 million Nokia Eseries
devices during the third quarter 2008.
The following chart sets out our mobile device volumes for the
periods indicated, as well as the year on year and sequential growth
rates, by geographic area.
+-------------------------------------------------------------------+
| NOKIA MOBILE DEVICE VOLUME BY GEOGRAPHIC AREA |
|-------------------------------------------------------------------|
| | | | YoY | | QoQ |
| (million units) | Q3/2008 | Q3/2007 | Change | Q2/2008 | Change |
|-------------------+---------+---------+--------+---------+--------|
| Europe | 27.4 | 29.0 | -5.5% | 27.1 | 1.1% |
|-------------------+---------+---------+--------+---------+--------|
| Middle East & | | | | | |
| Africa | 21.5 | 19.3 | 11.4% | 21.1 | 1.9% |
|-------------------+---------+---------+--------+---------+--------|
| Greater China | 19.8 | 18.9 | 4.8% | 17.6 | 12.5% |
|-------------------+---------+---------+--------+---------+--------|
| Asia-Pacific | 33.6 | 29.5 | 13.9% | 36.4 | -7.7% |
|-------------------+---------+---------+--------+---------+--------|
| North America | 4.5 | 5.4 | -16.7% | 4.5 | 0.0% |
|-------------------+---------+---------+--------+---------+--------|
| Latin America | 11.0 | 9.6 | 14.6% | 15.3 | -28.1% |
|-------------------+---------+---------+--------+---------+--------|
| Total | 117.8 | 111.7 | 5.5% | 122.0 | -3.4% |
+-------------------------------------------------------------------+
On September 5, 2008, Nokia updated its mobile device market share
outlook by expecting the mobile device market share in the third
quarter 2008 to be lower than in the second quarter 2008, in
comparison to its earlier expectation for its mobile device market
share in the third quarter 2008 to be approximately at the same level
sequentially. Based on our preliminary market estimate, Nokia's
mobile device market share for the third quarter 2008 was 38%,
compared with 39% in the third quarter 2007 and 40% in the second
quarter 2008. Our year on year market share decline was driven
primarily by lower market share in Middle East & Africa, Greater
China, North America and Europe. Our market share was approximately
on the same level year on year in Asia-Pacific, while it was higher
in Latin America. Our sequential market share decline was driven
primarily by lower market share in Latin America, Europe, Middle East
& Africa and Asia-Pacific. Our market share was approximately on the
same level sequentially in Greater China and North America. Multiple
factors contributed to the sequential decline in our mobile device
market share. These included our tactical decision not to meet
certain aggressive pricing of some competitors, the overall market
competition, including entry markets, and the temporary impact of a
slower ramp-up of a mid-range Nokia device in the third quarter 2008.
Our mobile device average selling price (ASP) in the third quarter
2008 was EUR 72, down from EUR 82 in the third quarter 2007 and down
from EUR 74 in the second quarter 2008. The lower year on year ASP
was primarily due to a higher proportion of lower priced products and
the negative impact of the weaker US dollar. Approximately 50% of the
year on year decline in ASP was caused by the impact of changes in
exchange rates. The lower sequential ASP was primarily due to a
higher proportion of lower priced products. Starting from the first
quarter 2008, our ASP excludes net sales from our services and
software business. Prior periods have been reclassified for
comparison purposes.
Third quarter 2008 Devices & Services net sales declined 7% to EUR
8.6 billion, compared with EUR 9.2 billion in the third quarter 2007.
At constant currency, Devices & Services net sales would have
decreased 1%. Volume growth was more than offset by an ASP decline,
driven primarily by a higher proportion of lower priced devices, and
the negative impact of the weaker US dollar compared to the third
quarter 2007. Of our total Devices & Services net sales, services and
software contributed EUR 115 million in the third quarter 2008.
Services and software billings were EUR 140 million for the third
quarter 2008. Based on the various business models, part of the
services and software revenue may not be recognized at the time of
billing but deferred to be recognized in future periods to reflect
the state of completion of the service and/or software delivery.
Net sales growth in Devices & Services was strongest year on year in
Latin America, followed by Greater China. Net sales were down year on
year in North America, Europe, and to a lesser extent in Asia-Pacific
and Middle East & Africa.
Devices & Services reported gross profit decreased 7% to EUR 3.1
billion, compared with EUR 3.4 billion in the third quarter 2007,
with a reported gross margin of 36.5% (36.5%). Devices & Services
non-IFRS gross profit also decreased 7% to EUR 3.1 billion, compared
with EUR 3.4 billion in the third quarter 2007, with a non-IFRS gross
margin of 36.5% (36.5%).
Devices & Services reported operating profit decreased 18% to EUR 1.6
billion, compared with EUR 2.0 billion in the third quarter 2007,
with a reported operating margin of 18.6% (21.2%). Devices & Services
non-IFRS operating profit also decreased 18% to EUR 1.6 billion,
compared with EUR 2.0 billion in the third quarter 2007, with a
non-IFRS operating margin of 18.6% (21.2%). The 18% year on year
decrease in reported and non-IFRS operating profit for the third
quarter 2008 was driven primarily by lower net sales and slightly
higher operating expenses compared to the third quarter 2007.
NAVTEQ
On July 10, 2008, Nokia completed the acquisition of NAVTEQ, a
leading provider of comprehensive digital map information. As part of
Nokia, NAVTEQ continues to develop its world-class expertise in the
navigation industry, service its strong customer base, and invest in
the further development of its industry-leading map data and
technology platform. The map data business of NAVTEQ is a separate
reportable segment of Nokia starting from the third quarter 2008.
Accordingly, the results of NAVTEQ are not available for prior
periods.
Third quarter 2008 NAVTEQ reported net sales were EUR 156 million.
NAVTEQ reported gross profit was EUR 138 million, with a gross margin
of 88.5%. Non-IFRS gross profit was EUR 139 million, with non-IFRS
gross margin of 88.5%. NAVTEQ had a reported operating loss of EUR 80
million, including the negative impact of EUR 109 million in
intangible asset amortization and other purchase price accounting
related items. The reported operating margin was -51.3%. NAVTEQ
non-IFRS operating profit was EUR 29 million, with a non-IFRS
operating margin of 18.5%.
Nokia Siemens Networks
Third quarter 2008 net sales decreased 5% to EUR 3.5 billion,
compared with EUR 3.7 billion in the third quarter 2007. At constant
currency, Nokia Siemens Networks net sales would have been flat.
The following chart sets out Nokia Siemens Networks net sales for the
periods indicated, as well as the year on year and sequential growth
rates, by geographic area.
+-------------------------------------------------------------------+
| NOKIA SIEMENS NETWORKS NET SALES BY GEOGRAPHIC AREA |
|-------------------------------------------------------------------|
| | | | YoY | | QoQ |
| EUR million | Q3/2008 | Q3/2007 | Change | Q2/2008 | Change |
|-------------------+---------+---------+--------+---------+--------|
| Europe | 1 358 | 1 500 | -9.5% | 1 412 | -3.8% |
|-------------------+---------+---------+--------+---------+--------|
| Middle East & | | | | | |
| Africa | 424 | 448 | -5.4% | 553 | -23.3% |
|-------------------+---------+---------+--------+---------+--------|
| Greater China | 288 | 372 | -22.6% | 413 | -30.3% |
|-------------------+---------+---------+--------+---------+--------|
| Asia-Pacific | 894 | 849 | 5.3% | 1 076 | -16.9% |
|-------------------+---------+---------+--------+---------+--------|
| North America | 150 | 152 | -1.3% | 158 | -5.1% |
|-------------------+---------+---------+--------+---------+--------|
| Latin America | 389 | 353 | 10.2% | 455 | -14.5% |
|-------------------+---------+---------+--------+---------+--------|
| Total | 3 503 | 3 674 | -4.7% | 4 067 | -13.9% |
+-------------------------------------------------------------------+
Nokia Siemens Networks reported gross profit increased 4% to EUR 1.1
billion, compared with EUR 1.0 billion in the third quarter 2007,
with a gross margin of 30.8% (28.3%). Nokia Siemens Networks non-IFRS
gross profit increased 1% to EUR 1.1 billion, compared with EUR 1.1
billion in the third quarter 2007, with a non-IFRS gross margin of
31.2% (29.2%). The higher year on year non-IFRS gross profit in the
third quarter 2008 resulted primarily from the benefits of the
continuing restructuring program and ongoing focus on deal quality
and project execution, offset somewhat by the lower year on year net
sales.
Nokia Siemens Networks had a third quarter 2008 reported operating
loss of EUR 1 million compared with a reported operating loss of EUR
120 million in the third quarter 2007, with a reported operating
margin of 0% (-3.3%). Nokia Siemens Networks non-IFRS operating
profit increased 61% to EUR 177 million in the third quarter 2008,
compared with EUR 110 million in the third quarter 2007, with a
non-IFRS operating margin of 5.1% (3.0%). The year on year
improvement in Nokia Siemens Networks non-IFRS operating profit,
reflected improved gross margin and lower operating expenses. Nokia
Siemens Networks continued to be on track to deliver the annual EUR 2
billion cost synergy target as previously announced.
Q3 2008 OPERATING HIGHLIGHTS
Nokia
- Nokia completed its acquisition of NAVTEQ, a leading provider of
comprehensive digital map data.
- Nokia and Qualcomm announced that they entered into a new agreement
covering various standards, including GSM, EDGE, CDMA, WCDMA, HSDPA,
OFDM, WiMAX, LTE and other technologies. The agreement resulted in
settlement of all litigation between the two companies.
Devices
- Plans announced on June 24, 2008 to establish the Symbian
Foundation received further industry support. On September 9, 2008,
nine more companies announced their endorsement of the plans,
bringing to 40 the number of companies confirming commitment to the
initiative. The Symbian Foundation is expected to begin operations in
the first half 2009, subject to the acquisition of Symbian Limited by
Nokia, expected to be completed during the fourth quarter 2008,
subject to customary closing conditions including regulatory
approvals.
- Further strengthening its Nokia Nseries range of devices, Nokia
unveiled the Nokia N79 and Nokia N85. Nokia also introduced the Nokia
8800 Carbon Arte.
- Nokia announced that Microsoft Exchange ActiveSync will be
available in all Nokia S60 3rd Edition devices. Nokia also announced
that Mail for Exchange will be available out-of-the-box in future
releases of Nokia Eseries and Nokia Nseries devices.
Services & Software
- Nokia announced the renewal of its business mobility strategy and
plans to cease developing and marketing its own behind-the-firewall
business mobility solutions. The remainder of the appropriate
technologies and expertise will be reallocated to Nokia's new
consumer push e-mail service where most of the technology and
resourcing is already in use.
- Nokia announced that it is in the advanced stages of discussions
over the potential sale of its security appliances business to a
financial investor. Nokia will announce further information about
this transaction should a definitive agreement be reached.
- Nokia announced the acquisition of OZ Communications, designed to
strengthen its position in consumer mobile messaging. The acquisition
is expected to be completed in the fourth quarter 2008.
- Nokia announced that the United Kingdom will be the first market in
the world to launch 'Comes With Music', Nokia's service that
introduces a new way for people to discover and enjoy music.
- Nokia launched Nokia Music Store, its digital music service, in
Spain.
- Nokia updated Ovi.com with functionality for syncing your calendar,
contacts, notes and tasks between a Nokia mobile device and
www.ovi.com.
NAVTEQ
- NAVTEQ was selected to provide traffic data as part of Verizon FIOS
TV.
- NAVTEQ will provide both NAVTEQ Traffic RDS delivery service and
NAVTEQ interactive advertising services for multiple Garmin devices
(the nuvi 755T and 775T and nuvi 2x5 family). Together with Garmin,
NAVTEQ will be the first to bring an advertising supported, real-time
traffic service to market in North America.
- NAVTEQ released its first Traffic Patterns product in Europe.
- NAVTEQ now has more than 200 merchants enrolled in its Direct
Access program, which helps merchants ensure their outlets are
included in the NAVTEQ maps.
Nokia Siemens Networks
- Nokia Siemens Networks provided over 75% of the mobile
communication systems for the host cities at the Olympics in China;
Nokia Siemens Networks also signed major network expansion deals with
China Mobile and Chunghwa Telecom.
- Nokia Siemens Networks signed further major network modernization
and expansion contracts, all of which included a significant services
element, with O2 in Germany, Telcel in Mexico, Indosat in Indonesia
and Telekom Srbija, while three new GSM-R deals, in Spain, Portugal
and China, confirmed Nokia Siemens Networks' leadership in the field.
- Nokia Siemens Networks and Verizon carried out a successful 100
Gbps transmission on a single wavelength for more than 1 040
kilometers over deployed field fiber, setting a new distance record
and demonstrating better performance than conventional transmission.
- Nokia Siemens Networks continued its progress towards the
deployment of next generation Long Term Evolution (LTE) mobile
networks with the successful conclusion of a demonstration on a
commercial LTE platform with Vodafone Germany.
- Nokia Siemens Networks announced that it is to create the world's
largest shared 3G network with near complete population coverage in
the UK by the end of 2009, after signing a contract with Mobile
Broadband Network Ltd, the network collaboration joint venture
between T-Mobile UK and 3UK.
For more information on the operating highlights mentioned above,
please refer to related press announcements at the following links:
http://www.nokia.com/press,
http://www.navteq.com/about/press.html,
http://www.nokiasiemensnetworks.com/press.
NOKIA IN THE THIRD QUARTER 2008
(International Financial Reporting Standards (IFRS) comparisons given
to the third quarter 2007 results, unless otherwise indicated.)
As of January 1, 2008, our three mobile device business groups,
Mobile Phones, Multimedia and Enterprise Solutions, and the
supporting horizontal groups were replaced by an integrated business
segment, Devices & Services. Prior period results for Nokia and its
reportable segments have been regrouped for comparability purposes
according to the new reportable segments (on an unaudited basis).
Devices & Services has three business units, Devices, Services &
Software and Markets, supported by a Corporate Development Office.
Link to regrouped 2007 financials: www.nokia.com/investors.
On July 10, 2008, Nokia completed the acquisition of NAVTEQ
Corporation. The map data business of NAVTEQ is a separate reportable
segment of Nokia starting from the third quarter 2008. Accordingly,
the results of NAVTEQ are not available for the prior periods.
Nokia's net sales decreased 5% to EUR 12 237 million (EUR 12 898
million). Net sales of Devices & Services decreased 7% to EUR 8 605
million (EUR 9 238 million). Net sales of NAVTEQ were EUR 156
million. Net sales of Nokia Siemens Networks were EUR 3 503 million
(EUR 3 674 million).
Operating profit decreased to EUR 1 469 million (EUR 1 862 million),
representing an operating margin of 12.0% (14.4%). Operating profit
in Devices & Services decreased 18% to EUR 1 602 million (EUR 1 959
million), representing an operating margin of 18.6% (21.2%).
Operating loss in NAVTEQ was EUR 80 million, representing an
operating margin of -51.3%.
Operating loss in Nokia Siemens Networks was EUR 1 million (EUR 120
million), representing an operating margin of 0% (-3.3%). Group
Common Functions reported expense totaled EUR 52 million (positive
EUR 23 million, including a gain on sale of real estate of EUR 60
million).
In the period from July to September 2008, net financial expense was
EUR 57 million (net financial income EUR 67 million). Profit before
tax and minority interests was EUR 1 410 million (EUR 1 924 million).
Net profit totaled EUR 1 087 million (EUR 1 563 million). Earnings
per share decreased to EUR 0.29 (basic) and to EUR 0.29 (diluted),
compared with EUR 0.40 (basic) and EUR 0.40 (diluted) in the third
quarter of 2007.
NOKIA IN JANUARY - SEPTEMBER 2008
(International Financial Reporting Standards (IFRS) comparisons given
to the January-September 2007 results, unless otherwise indicated.)
As of January 1, 2008, our three mobile device business groups,
Mobile Phones, Multimedia and Enterprise Solutions, and the
supporting horizontal groups were replaced by an integrated business
segment, Devices & Services. Prior period results for Nokia and its
reportable segments have been regrouped for comparability purposes
according to the new reportable segments (on an unaudited basis).
Devices & Services has three business units, Devices, Services &
Software and Markets, supported by a Corporate Development Office.
Link to regrouped 2007 financials: www.nokia.com/investors.
As of April 1, 2007, Nokia results include those of Nokia Siemens
Networks on a fully consolidated basis. Nokia Siemens Networks, a
company jointly owned by Nokia and Siemens, is comprised of the
former Nokia Networks and Siemens' carrier-related operations for
fixed and mobile networks. Accordingly, the results of Nokia Group
and Nokia Siemens Networks for periods from April 1, 2007 are not
directly comparable to any prior period results. Prior periods
include the former Nokia Networks business group only.
On July 10, 2008, Nokia completed the acquisition of NAVTEQ
Corporation. The map data business of NAVTEQ is a separate reportable
segment of Nokia starting from the third quarter 2008. Accordingly,
the results of NAVTEQ are not available for the prior periods.
Nokia's net sales increased 8% to EUR 38 048 million (EUR 35 341
million). Net sales of Devices & Services increased 1% to EUR 26 958
million (EUR 26 564 million). Net sales of NAVTEQ were EUR 156
million. Net sales of Nokia Siemens Networks were EUR 10 971 million
(EUR 8 809 million).
Operating profit decreased to EUR 4 474 million (EUR 5 493 million),
representing an operating margin of 11.8% (15.5%). Operating profit
in Devices & Services increased 1% to EUR 5 050 million (EUR 4 990
million), representing an operating margin of 18.7% (18.8%).
Operating loss in NAVTEQ was EUR 80 million, representing an
operating margin of -51.3%.
Operating loss in Nokia Siemens Networks was EUR 122 million (EUR 1
308 million), representing an operating margin of -1.1% (-14.8%).
Group Common expenses totaled EUR 374 million (positive EUR 1 811
million, including a gain of EUR 1 879 million on the formation of
Nokia Siemens Networks and a gain on sale of real estate of EUR 75
million).
In the period from January to September 2008, net financial income
was EUR 14 million (net financial income EUR 175 million). Profit
before tax and minority interests was EUR 4 494 million (EUR 5 695
million). Net profit totaled EUR 3 412 million (EUR 5 370 million).
Earnings per share decreased to EUR 0.91 (basic) and to EUR 0.90
(diluted), compared with EUR 1.37 (basic) and EUR 1.36 (diluted) in
the first nine months of 2007.
PERSONNEL
The average number of employees during January-September 2008 was 118
040. At September 30, 2008, we employed a total of 123 006 people
(112 262 people at December 31, 2007).
SHARES
The total number of Nokia shares at September 30, 2008 was 3 800 939
349. At September 30, 2008, Nokia and its subsidiary companies owned
104 449 841 Nokia shares, representing approximately 2.7% of the
total number of Nokia shares and the total voting rights.
The complete press release with tables is available at
http://www.nokia.com/results/results2008Q3e.pdf.
FORWARD-LOOKING STATEMENTS
It should be noted that certain statements herein which are not
historical facts, including, without limitation, those regarding: A)
the timing of product, services and solution deliveries; B) our
ability to develop, implement and commercialize new products,
services, solutions and technologies; C) expectations regarding
market growth, developments and structural changes; D) expectations
regarding our mobile device volume growth, market share, prices and
margins; E) expectations and targets for our results of operations;
F) the outcome of pending and threatened litigation; G) expectations
regarding the successful completion of contemplated acquisitions on a
timely basis and our ability to achieve the set targets upon the
completion of such acquisitions; and H)statements preceded by
"believe," "expect," "anticipate," "foresee," "target," "estimate,"
"designed," "plans," "will" or similar expressions are
forward-looking statements. These statements are based on
management's best assumptions and beliefs in light of the information
currently available to it. Because they involve risks and
uncertainties, actual results may differ materially from the results
that we currently expect. Factors that could cause these differences
include, but are not limited to: 1) competitiveness of our product,
service and solutions portfolio; 2) the extent of the growth of the
mobile communications industry and general economic conditions
globally; 3) the growth and profitability of the new market segments
that we target and our ability to successfully develop or acquire and
market products, services and solutions in those segments; 4) our
ability to successfully manage costs; 5) the intensity of competition
in the mobile communications industry and our ability to maintain or
improve our market position or respond successfully to changes in the
competitive landscape; 6) the impact of changes in technology and our
ability to develop or otherwise acquire complex technologies as
required by the market, with full rights needed to use; 7) timely and
successful commercialization of complex technologies as new advanced
products, services and solutions; 8) our ability to protect the
complex technologies, which we or others develop or that we license,
from claims that we have infringed third parties' intellectual
property rights, as well as our unrestricted use on commercially
acceptable terms of certain technologies in our products, services
and solution offerings; 9) our ability to protect numerous Nokia and
Nokia Siemens Networks patented, standardized or proprietary
technologies from third-party infringement or actions to invalidate
the intellectual property rights of these technologies; 10) Nokia
Siemens Networks' ability to achieve the expected benefits and
synergies from its formation to the extent and within the time period
anticipated and to successfully integrate its operations, personnel
and supporting activities; 11) whether, as a result of investigations
into alleged violations of law by some current or former employees of
Siemens AG ("Siemens"), government authorities or others take further
actions against Siemens and/or its employees that may involve and
affect the carrier-related assets and employees transferred by
Siemens to Nokia Siemens Networks, or there may be undetected
additional violations that may have occurred prior to the transfer,
or ongoing violations that may have occurred after the transfer, of
such assets and employees that could result in additional actions by
government authorities; 12) any impairment of Nokia Siemens Networks
customer relationships resulting from the ongoing government
investigations involving the Siemens carrier-related operations
transferred to Nokia Siemens Networks; 13) occurrence of any actual
or even alleged defects or other quality issues in our products,
services and solutions; 14) our ability to manage efficiently our
manufacturing and logistics, as well as to ensure the quality,
safety, security and timely delivery of our products, services and
solutions; 15) inventory management risks resulting from shifts in
market demand; 16) our ability to source sufficient amounts of fully
functional components and sub-assemblies without interruption and at
acceptable prices; 17) any disruption to information technology
systems and networks that our operations rely on; 18) developments
under large, multi-year contracts or in relation to major customers;
19) economic or political turmoil in emerging market countries where
we do business; 20) our success in collaboration arrangements
relating to development of technologies or new products, services and
solutions; 21) the success, financial condition and performance of
our collaboration partners, suppliers and customers; 22) exchange
rate fluctuations, including, in particular, fluctuations between the
euro, which is our reporting currency, and the US dollar, the Chinese
yuan, the UK pound sterling and the Japanese yen, as well as certain
other currencies; 23) the management of our customer financing
exposure; 24) allegations of possible health risks from
electromagnetic fields generated by base stations and mobile devices
and lawsuits related to them, regardless of merit; 25) unfavorable
outcome of litigations; 26) our ability to recruit, retain and
develop appropriately skilled employees; 27) the impact of changes in
government policies, laws or regulations; and 28) our ability to
effectively and smoothly implement our new organizational structure;
as well as the risk factors specified on pages 10-25 of Nokia's
annual report on Form 20-F for the year ended December 31, 2007 under
"Item 3.D Risk Factors." Other unknown or unpredictable factors or
underlying assumptions subsequently proving to be incorrect could
cause actual results to differ materially from those in the
forward-looking statements. Nokia does not undertake any obligation
to update publicly or revise forward-looking statements, whether as a
result of new information, future events or otherwise, except to the
extent legally required.
Nokia, Helsinki - October 16, 2008
Media and Investor Contacts:
Corporate Communications, tel. +358 7180 34900
Investor Relations Europe, tel. +358 7180 34289
Investor Relations US, tel. +1 914 368 0555
- Nokia plans to report its Q4 and full year 2008 results on January
22, 2009.
- Nokia plans to report its other quarterly results in 2009 on the
following dates: Q1 on April 16, Q2 on July 16 and Q3 on October 15,
2009.
- Nokia plans to publish its annual report, Nokia in 2008, in week 12
of 2009.
- The Annual General Meeting is scheduled to be held on April 23,
2009.
www.nokia.com
--- End of Message ---
NOKIA
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