Business did not turn out in rosy hues for Nokia Corp in the third quarter as the telecom giant reported a 20-percent drop in operating profit and a small 1-percent increase in net sales. However, rival Sony Ericsson Mobile Communications L.P. saw a rise in mobile-phone sales and profits.
This trumps the company’s optimistic forecast in September for its handsets business.
The company’s net sales grew 1 percent to $8.5 billion compared with $8.4 billion in the year-ago period. Its operating profit stood at $1.5 billion, dropping 20 percent from $1.42 billion in the third quarter of last year. But it still recorded a net profit of $817 million. Its earning per share fell to 17 cents per share from 21 cents in the third quarter last year.
In its mobile-phone division, its net sales fell 13 percent to $5.4 billion in contrast with $6.3 billion in the year-ago period. The firm, however, had a $1 billion operating profit in that division. The mobile-phone maker’s sour picture came from the United States and Latin America.
“We made substantial market-share gains in major Western European markets and maintained our leadership position in China,” said Jorma Ollila, chairman and chief executive officer of the company. “However, in the U.S., we lost market share during the quarter, and despite strong sales growth, our market share in Latin America was down slightly from the second-quarter 2004.”
Its network division enjoyed a boost with a 21-percent growth in net sales. It recorded $1.8 billion in contrast to $1.5 billion in the year-ago period. The growth took place in Europe, Latin America and Asia as operators stepped up capacity and coverage, according to the company.
Its enterprise division savored a 52-percent bounce in net sales to $212 million. Its multimedia division grew 94 percent year on year to $1.13 billion, owing to strong sales in its imaging devices like the Nokia 7610 and Nokia 6600.
The company, however, expects a better fourth quarter with sales of between $10.3 billion and $10.6 billion.
For its part, Swedish-Japanese handset maker Sony Ericsson more than tripled its third-quarter pretax profits as sales of its new feature-rich phones soared.
The world’s fifth-biggest cell-phone manufacturer earned $111 million in the third quarter-up from $77 million last year-and racked up $167 million before taxes, beating market expectations of $146 million. It marked the fifth consecutive profitable quarter for the joint venture between L.M. Ericsson and Sony Corp.
The company, which was founded in 2001, had lost money steadily until its recent impressive performance.
Analysts credit Sony Ericsson’s line of high-tech, colorful camera phones. The manufacturer shipped 10.7 million handsets in the quarter, up 51 percent over last year and beating the predicted 10.48 million units.
Production is expected to increase as Sony Ericsson increases shipments of more expensive models to Japan and offers more third-generation-enabled devices.
