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Asia boosts Nokia earnings

Rosier outlook

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With its first positive financial news for a year, Nokia bounded past analyst expectations, and raised its outlook for the remainder of 2005.

In Q1 FY 2005, Nokia sales rose 17 per cent year-on-year to €7.4 bn, with net income up to €1.13bn, up from €1bn a year ago. Operating margin fell by a percentage to point to 15.1, while the average selling price is pegged at €111.

The greatest growth came from Asia, with China up 69 per cent and the APAC region up 44 per cent, while CEO Jorma Olila vowed to improve the relatively poor performance in the Americas. US success with the 2110 handset once made Nokia a global company, and hastened the demise of analog. But North American carriers' preference for no name handsets, and the public's appetite for unimaginative clones leaves Nokia in the cold. Nokia says the migration away from TDMA also hurt it.

Although mobile phones contribute 61 pennies for every pound Nokia earns, sales were up in the other divisions. Networks saw a tidy profit of €221m on sales of €1.4bn, up six per cent from last year. The troubled Multimedia division is back in the black, recording a €155m profit on sales of €1.13bn. The Enterprise business saw the strongest sales growth, up 67 per cent to €307m and is almost in the black, losing €9m.

Competitors continue to nibble away at the handset No.1, with Nokia's share slipping to 32 per cent from the final quarter of FY 2004. Nokia expects the world's handset makers to ship 740m mobiles in 2005, up from 643m last year.

Nokia bought back 54m shares in the quarter at a cost of €651m. ®

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