Nokia Posts Loss in Q3; Losing Ground in the Smartphone Market

Nokia, the world’s leading cell phone maker, has reported a loss for the third quarter of 2009 amid global economic downturn. The handset giant still leads the world in terms of entire cell phone shipments, but its smartphone segment is apparently losing ground to strong rivals such as Apple and Research in Motion.

For the period ended on September 30, Nokia posted an unexpected loss of 559 million euros ($832 million) compared with a profit of 1.09 billion euros in the prior year’s quarter, probably as a result of declining sales. During the third quarter, Nokia sold around 108.5 million handsets, 8 percent less than Q3 2008. Still, the company managed to maintain its overall market share at 38%, which is roughly the same it has had since the third quarter last year.

Nokia may be able to retain its dominance in the lower-end market, but it is not doing very well in smartphone sales. In the face of intensifying competition from companies such as iPhone, BlackBerry and the rising Android phones, Nokia’s smartphone market share has dropped to 35 percent, compared to 41 percent in the second quarter. With smartphones becoming increasingly popular, Nokia’s weakness in this field may be a drag on the company’s overall sale in long term.
Olli-Pekka Kallasvuo, Nokia’s CEO said in a statement that the demand for mobile devices has improved during the previous quarter, but sales were partly constrained by a shortage of components, such as camera modules.

Still, Kallasvuo expects the October-December period to be the best quarter of the year in terms of net sales, volumes and margins. Nokia sees the overall global market share remain unchanged at about 38 percent, with a total of 1.12 billion units sold by the end of the year. It would make a 7 percent drop comparing with 2008, but is slightly better than its previous estimate.

Nokia is also planning on rolling out several new handsets like N97 mini, X6 and N900, as well as Nokia Booklet 3G netbook by the end of this year. Yet, whether these new additions can improve its financial results remains unknown.

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