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Nokia Corporation (



Q1 2011 Earnings Call

April 21, 2011 8:00 am ET


Matt Shimao - Head, IR

Stephen Elop - President and CEO

Timo Ihamuotila - CFO


Gareth Jenkins - UBS

Tim Boddy - Goldman Sachs

Tim Long - Bank of Montreal

Andrew Griffin - BofA Merrill Lynch

Mike Walkley - Canaccord Genuity

Kulbinder Garcha - Credit Suisse

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At this time, I would like to welcome everyone to the Nokia first quarter 2011 earnings results conference call. (Operator Instructions) I will now turn the call over to Mr. Matt Shimao, Head of Investor Relations.

Matt Shimao

Ladies and gentlemen, welcome to Nokia's first quarter 2011 conference call. I am Matt Shimao, Head of Nokia Investor Relations; Stephen Elop, President and CEO of Nokia; and Timo Ihamuotila, CFO of Nokia are here in Espoo with me today.

During this call, we will be making forward-looking statements regarding the future business and financial performance of Nokia and its industry. These statements are predictions that involve risks and uncertainties. Actual results may therefore differ materially from the results we currently expect. Factors that could cause such differences can be both, external such as general, economic and industry conditions as well as internal operating factors. We have identified these in more detail on pages 11 through 32 of our 2010 20-F and in our quarterly results press release issued today.

Please note that our results disclosed today include non-IFRS results information in addition to the reported results information, our complete interim report with tables available on our website includes a detailed explanation of the content of the non-IFRS information and a reconciliation between the non-IFRS and the reported information.

With that, Stephen, over to you.

Stephen Elop

Thank you, Matt. Q1 of 2011 has been a remarkable quarter for Nokia. It was during this quarter that we articulated the serious nature of Nokia's challenges in a manner that served as a quality arms for our employees. We also constructed and announced Nokia's new strategy for the years ahead. And now, we have shifted our purpose from defining our new strategy to taking the first important steps to realization.

During this time the fiercely competitive environment continue to increase and affect our business. Yet with our new strategy, we have more clarity around future direction and a stronger recognition for the work we must accomplish in order to improve our financial results.

In Q1, we took immediate steps to mobilize the company around three new business objectives, which are, regaining our leadership in smart devices with Microsoft as a partner; growing our leadership in mobile phones, as we bring the internet to the next billion; and also investing in future disruptions.

To accomplish these objectives, we are focusing on key differentiators, including signature user experiences, iconic hardware, differentiated software, and supporting an eco-system of services that consumers' demand. We are also taking advantage of our global reach, powerful supply networks and the strength of our brand. With all of this transformation, we also recognized that we must change the way we work in order to achieve our new objectives.

Today, I am going to structure my remarks around the current situation and the steps we are taking relative to the different pillars of our new strategy. First, we are focused on improving the product competitiveness of our smart devices. This begins with being laser-focused on our Symbian results, as we commence our transition to the Windows Phone platform. While competitive challenges remain and the trends that precipitated our new strategy persist, we saw no immediate evidence of a sudden change in the consumer perception around Symbian, as a result of our announcements on February 11.

During the quarter, we took deliberate action in an effort to support Symbian sales during the transition to the Windows Phone platform, including work, to enhance the ongoing competitiveness of the Symbian range of products. For example, we recently announced the Nokia E6 and Nokia X7, two products with the new Symbian Anna software.

The team has renewed the user experience with fresh icons of faster browser and enterprise-grade security. Consumers, who purchased the Nokia N8, E7, C7 and the C601 also will be able to upgrade the Symbian Anna software. The combination of these new devices are future products and the ongoing pattern of software enhancements, gives us increased confidence that we can engage both existing and new Symbian customers, during our transition.

Additionally, we started shifting our smartphone business from Symbian to the Windows Phone platform, through our work with Microsoft and various industry partners. As we said previously, we will not announce specific ship dates until we are quite close to the product launch. But our confidence to deliver products with improved quality is growing everyday.

It was encouraging to show-off our early work on the Windows Phone platform to our sales and marketing team, during our annual sales and marketing meeting last month. But most notably for our smart devices effort, today we signed the definitive agreement between Nokia and Microsoft.

While this partnership is significant in size and scope, we are able to finalize it earlier, than originally anticipated. We thought it would be helpful to characterize the nature of this agreement, as this is a key to our future strategy. At the highest level, we believe this is a win-win partnership. It is the complementary nature of our assets and the overall competitiveness of that combined offering that is the foundation of our relationship.

Nokia will adopt the Windows Phone platform as our principle smarphone strategy and we are innovating and differentiating on top of the platform in a variety of areas to drive the future of the Windows Phone eco-system. We believe the structure of the agreement is balanced and reflects each of our contributions to the partnership.

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