Nokia Shows Drop in Quarterly Profits, May Change Ecosystem

By Ed Silverstein January 27, 2011

Nokia Corp., reported a decline in net profit for the fourth quarter of 2010 when compared to the same three months of 2009. The cell phone maker is also facing challenges that could have an impact on current sales.

When discussing the quarter, CEO Stephen Elop suggested the company could make some changes on its strategy as it relates to ecosystems.

"In Q4 we delivered solid performance across all three of our businesses, and generated outstanding cash flow,” Elop added in a company statement. “Additionally, growth trends in the mobile devices market continue to be encouraging. Yet, Nokia faces some significant challenges in our competitiveness and our execution. In short, the industry changed, and now it's time for Nokia to change faster."

Net profit for the three months ending Dec. 31 was 745 million Euros ($1,021,841,794), which was lower than 948 million Euros for the same period in 2009, but came in higher than the 526 million Euros that had been predicted by analysts, according to a report from the Wall Street Journal.

Analysts had predicted lower net profit – at least in part – because of competition that Nokia faces from rivals in the high end and low end of the mobile device sector.

Nokia said its net sales in the fourth quarter were 6 percent higher than the fourth quarter of 2009. The sales volume was also higher than predicted by analysts.

Nokia sold 124 million mobile phones in the fourth quarter, a decrease of 3 percent from the same quarter in 2009, the company reported. The average selling price increased.

The Journal reports that Elop said during a conference call Nokia should either "build or join a competitive ecosystem." Nokia may adopt a new operating system such as Google's Android, an open-source platform, an analyst told The Journal.

Several observers say that Nokia needs to replace its reliance on the Symbian platform. The company was supposed to use MeeGo, developed with Intel Corp., but devices based on MeeGo have been delayed, the Journal reports.

Devices from Apple and those based on Android have been serious competitors for Nokia. Nokia was also forced to cancel its planned release of its X7 smartphone in the United States, according to a report from TechZone360.

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Ed Silverstein is a TechZone360 contributor. To read more of his articles, please visit his columnist page.

Edited by Tammy Wolf

TechZone360 Contributor

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