Nokia shocks market, posts $834M loss

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Nokia reported a $834 million loss in the third quarter, the handset maker's first quarterly net loss since 1996. The results are largely due to a writedown Nokia was forced to take on its Nokia Siemens Networks joint venture, though flagging smartphones sales also contributed to the dramatic decline. The staggering loss contrasts sharply to the $1.62 billion profit Nokia scored in the year-ago quarter.

In the third quarter, Nokia's bottom line took a major hit from a $1.35 billion goodwill writedown of Nokia Siemens, its infrastructure joint venture with Germany's Siemens. Net sales for the quarter were $14.57 billion, down 20 percent from the third quarter of 2008.

"The challenging competitive factors and market conditions in the infrastructure and related services business necessitated non-cash impairment charges at Nokia Siemens Networks," Nokia CEO Olli-Pekka Kallasvuo said in a statement. "We continue to support Nokia Siemens Networks actions to improve its performance."

Investors punished the company, sending Nokia's stock down more than 10 percent immediately following the news to around $13.79 per share.

Nokia's handset business stagnated in the quarter. Nokia shipped 108.5 million units in the quarter, up sequentially but down 8 percent from the 117.8 million it shipped in the year-ago quarter. Nokia's total handset market share stood at 38 percent, unchanged from the second quarter or the year-ago quarter. Nokia's average selling price fell to $92.19, down from $107 in the year-ago quarter.

Most troubling of all for Nokia was its struggles in the smartphone market. The company shipped 16.4 million smartphones in the quarter, down from 16.9 million in the second quarter. Its smartphone market share fell to 35 percent, down from 41 percent in the second quarter. Such figures are notable considering widely held expectations of significant growth in the smartphone market--at the expense of other types of devices.

Sales at Nokia Siemens slumped 21 percent to $4.16 billion. The joint venture had an operating loss of $1.64 billion in the quarter, compared with an operating loss of $1.48 million in the year-ago quarter. Nokia said that it now expects Nokia Siemens' market share to decline by more than previously expected in 2009, compared with 2008.

For more:
- see this release
- see this Bloomberg article
- see this Reuters article

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