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Nokia writedowns wipe out profits

Numbers, margins and services all slumpy

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Nokia lost €426m before tax in Q3 this year, as writedowns, a deflating global economy and freefalling American sales all took their toll.

That loss compares pretty badly to last year's pre-tax profit of more than €1.5bn. It comes on the back of 20 per cent drop in sales to $9.8bn. Margins on the sales it did make slipped by 3.1 per cent to 30.9 per cent.

Devices and Services share the blame with Nokia Siemens Networks for the sales slide. Nokia shifted 108.5 million devices between July and September, a drop of eight per cent on last year, while even Nokia admits the world market only dropped around seven per cent.

The NAVTEQ division saw a modest rise in sales of 5.7 per cent, but that's small potatoes. And the unit made a bigger loss than last year

Nokia Siemens Networks had a particularly grim old time: net sales down by 21 per cent and a €908m write-down on the unit contributing to the unit's overall operating loss of €1.1bn, and thereby blowing the whole firm's profits out of the water.

Ignoring the writedown and other charges, the firm reckons it would have reported operating profits of €741m, still 57.8 per cent down on the year.

Back in devices it's clear that the USA just isn't buying Nokia, with North American sales down 31.1 per cent on last year compared to a marginal European drop of 1.1 per cent. Overall the company's world share remains around 38 per cent, thanks to other companies experiencing even lower sales in Latin American, Africa and the Middle East, so worldwide Nokia remains the mobile phone of choice.

Olli-Pekka Kallasvuo, Nokia's CEO, tried to soften the blow by talking about component shortages and expense management, but it's hard to disguise such grim realities.

Kallasvuo expects industry mobile volumes to move up in the fourth quarter, with Nokia's share holding steady.

But that's still in a market that will be down 7 per cent on the eyar to 1.12 billion units. Still, last time around Nokia thought the total decline would be 10 per cent. ®

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