The Helsinki-based handset giant made $1.65 billion, or 42 cents a share, for the fourth quarter, as sales rose 13% from a year ago to $15.2 billion. Analysts surveyed by Thomson Financial were looking for a 34-cent profit on sales of $14.6 billion.
The combined mobile device volume of Nokia's Mobile Phones, Multimedia and Enterprise Solutions business groups for the fourth quarter 2006 was a record 106 million units, up 19% sequentially and 26% year on year.
Nokia's estimated market share for the fourth quarter 2006 was 36%, flat sequentially and up from 34% in the fourth quarter 2005. On a sequential basis, Nokia gained market share in Europe. This gain was offset by market-share declines in Latin America, North America and Asia-Pacific, while market share in China and Middle East and Africa remained virtually unchanged sequentially. On a year-on-year basis, Nokia gained market share in every area except North America in the fourth quarter 2006.The average selling price of Nokia's mobile devices fell to 89 euros from 93 euros in the third quarter and 99 euros a year ago. Nokia said its ASP was hit by a lower percentage of sales from higher-end products, specifically in multimedia business group, that more than offset the relatively stable ASPs in entry-level product sales. The year-on-year decline in the ASP was driven primarily by the strong growth of the emerging markets, which have lower ASPs, and the growth of Nokia's market share in those markets, "in addition to which certain higher-end products in our portfolio were not viewed as sufficiently competitive in various markets," Nokia said. The news comes as rival Motorola (MOT) plans job cuts to regain competitiveness following a fourth-quarter earnings disappointment predicated in part on lower mobile-phone pricing. "We achieved record device volumes, net sales and EPS for both the fourth quarter and full year 2006," said CEO Olli-Pekka Kallasvuo. "Also, on a sequential basis, profitability improved significantly, with gross margins for the quarter up in all Nokia business groups. "Nokia was able to increase its share of the global device market significantly in 2006 to an estimated 36%, clearly solidifying our number one position in the industry. We achieved this result through the strengths of Nokia's world class brand, products, cost structure and efficiency, without sacrificing our operating margins or cash flow." Nokia said it expects industry mobile device volumes in 2007 to grow by up to 10% from the approximately 978 million units Nokia estimates for 2006. It expects some decline in industry average selling prices, primarily reflecting the increasing impact of the emerging markets and competitive factors in general.