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Nokia Corporation Q1 2010 Earnings Call Transcript

Nokia Corporation Q1 2010 Earnings Call Transcript

Nokia Corporation (NOK)

Q1 2010 Earnings Call

April 22, 2010 8:00 AM ET


Olli-Pekka Kallasvuo - President and CEO

Timo Ihamuotila - EVP CFO

Kristian Pullola - VP, Head of Treasury and IR


James Dobson - Morgan Stanley

Mike Walkley - Piper Jaffray

Gareth Jenkin - UBS

Mark Sue - RBC Capital Market

Kai Korschel - Deutsche Bank

Ittai Kidron - Oppenheimer

Andrew Griffin - Bank of America Merril Lynch

Phil Cusick - Macquarie

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Kulbinder Garcha - Credit Suisse

Pierre Ferragu - Bernstein



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Good morning. My name is [Dennis] and I will be your conference operator today. At this time I would like to welcome everyone to the Nokia first quarter 2010 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. (Operator instructions) I will now turn the call over to Mr. Kristian Pullola, Vice President, Head of Treasury and Investor Relations. Sir, you may begin your conference.

Kristian Pullola

Ladies and gentlemen, welcome to Nokia's first quarter 2010 conference call. I'm Kristian Pullola, Head of Nokia Investor Relations; Olli-Pekka Kallasvuo, CEO; and, Timo Ihamuotila, CFO of Nokia are here in [Espo] with me today.

During this briefing and 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 materially differ from the results currently expected.

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 to 32 in our 2009 20-F and in our press release issued today.

Our aim is to finish this call in approximately one hour. To view the supporting slides while listening to the call, please go to the IR Web site. Please note that today's press release and this presentation includes non-IFRS results information in addition to the reported results information. Our quarterly results release includes a detailed explanation of the content of the non-IFRS information as well as a reconciliation between the two.

With that, Olli-Pekka, please go ahead.

Olli-Pekka Kallasvuo

Thank you, Kristian. Good morning and good afternoon. I know there will be a lot of sort of interest today to discuss the guidance we have given today and Timo will talk about that in a moment. But before that, I will go through the operational update. So please bear with me for some time.

In Q1 Nokia delivered revenue and earnings growth on a year-over-year basis. Although the competitive environment remains tough, the economic headwinds we faced last year have eased and the macro outlook is more supportive.

Despite challenges at the high end of our device portfolio, Nokia delivered results in line with our guidance. In our Devices & Services business Nokia continued to show solid smartphone momentum in lower price points.

In the seasonally slow Q1 we grew our converged mobile device units [read] smartphones on a sequential basis and increased our estimated converged mobile device volume market share. We have made good progress in this strategic area and we are capitalizing on our unique capability to bring the benefits of smartphones to the mass market globally.

Our high-end portfolio renewal is linked to the key 2010 operational milestones we communicated during our Capital Markets Day last December.

We are highly focused on execution to insure our new offerings are a success. We are working hard to deliver a family of Symbian^3 devices that are targeted to offer a clearly improved user experience, a high standard of quality and a competitive value to consumers.

You can expect the first Symbian^3 device to launch in Q2 and ship in Q3, first to the open channel as normal and then to the operators.

While this is somewhat later than our original internal plan, it is really most important to get the quality and the user experience right; and compared to the recent past we have raised the bar significantly on both of these critical dimensions.

We believe our Symbian^3 products will be a powerful force in the market in Q4 this year and we have shifted the planned introduction of Symbian^4 based products to next year. When it comes to MeeGo, we expect to achieve our product milestones by the end of this year.

I continue to be encouraged by the progress we are making. This year we are focused on delivering next generation products to the market, taking great strides forward with our user experience, improving our direct and continued relationships with consumers and fostering the growth of our developed ecosystem.

Already we have delivered on our promise to increase the proportion of Touch and [inaudible] devices in our portfolio with the launch of the Nokia C3, C6 and E5 last week and there is more to come.

Already we have also made clear progress with our solution strategy in the creating services on devices to provide compelling value. So let me get to that with an overview of Q1.

In Q1 the overall competitive environment for mobile [enhanced] most generally as we expected, tough but manageable. Our shipments were up 16% year-over-year and down 15% sequentially. On a sequential basis, we gained share in Greater China where we generated record volumes in net sales in Q1. However, we lost share in Europe, MEA, Asia Pacific an North America.

According to our estimates, our device volume market share was 33% in Q1, down 2% compared to Q4. Approximately half of this was due to [sale inverter] sell out dynamics according to our estimates.

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