Nokia net profit plunges down 90 percent

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Nokia, the number one maker of mobile phones in terms of market share, has reported in its first quarter of 2009 earnings today, and has said that it had a worse-than expected 90 percent drop in its net profit, as the phone maker faces a difficult year as the economic slowdown continues to hit hard.

Net profit, according to the Wall Street Journal, plummeted to €122 million, from €1.22 billion last year – missing the expectations by analysts to fall to €306 million.

Sales for its phones dropped 26.8 percent, from €12.6 million to  €9.27 million; as the company shipped 93.2 million units, also down from last year by 19 percent. Also bad news was that it has lost 2 percent of its market share, from 39 percent same quarter last year to 37 percent.

However, there was some positive news from Nokia, as its Services division managed to increase to 79 percent from the same quarter as last year, but down 5 percent from last quarter.

“In what has been an exceptionally tough environment, we continue to invest in a focused manner in consumer Internet services delivered across our broad portfolio of mobile devices. Combined, these solutions will drive our future growth,” CEO Olli-Pekka Kallasvuo said in a press release.

“Regarding the health of the overall mobile device market, the inventory already in the sales channels decreased substantially during Q1 due to extensive destocking by operators and distributors. This adversely impacted our sales volumes in the quarter.”

“However, it has also resulted in the demand picture becoming more predictable as we enter the second quarter.”

He also liked the performance of its new touchphone, the Nokia 5800 – as it includes the new “Comes with Music” service, allowing users to download music for free for one year after purchasing their phone. However, while the music comes with DRM, you can still play the song after the one year expires. Advertising for the new touchscreen device has been getting heavy rotation on cable music television channel, Channel V (and its sister network Channel V2).

Nokia shares on the New York Stock Exchange has, however, gone up after reporting its earnings. It is currently standing at US$14.51 (at the time of writing), with a increase of 8.61 percent.

Image from: Steve Garfield/Flickr (CC)