Nokia Eyes the Prize

The cell-phone giant pledges to unseat Motorola atop the U.S. handset market.
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Nokia's (NOK) - Get Report chief says the cell-phone giant is poised to retake the top spot among handset sellers in the U.S. in the second half of this year.

Speaking to analysts on a conference call Thursday, CEO Jorma Ollila says Nokia's market share in North America rose to 20% last quarter, reversing nearly a year of decline, thanks to gains by

Motorola

(MOT)

.

Ollila says the gains are sustainable and came from good products. "We are well placed to continue that momentum based on discussions we had with operators," says Ollila. "We'll be going to the No. 1 position."

Nokia's No. 1 status worldwide has come despite the Helsinki company's limited success in the U.S., where rivals like Motorola,

Samsung

and

LG

have been swifter to market with thin phones and clamshell models that consumers found fashionable.

Industry observers note that Nokia hasn't exactly been pliable with the U.S. telcos that tend to put lots of demands on phonemakers regarding features and prices. And Nokia, once the design leader, has fallen well behind the resurgent No. 2 Motorola.

Curiously, Nokia, which was more than a year late to the folding-phone trend, showed more of its characteristic inflexibility at last month's product unveiling. The latest crop of phones, while loaded with features like higher resolution cameras and FM radios, showed no signs of the super-slim influence swaying the industry.

But Ollila says he expects Nokia's N-series multimedia video and music phones to gain momentum this year.

While 2005 saw the emergence of the music phone, Ollila says "2006 will actually be the year when it will be very broadly accepted and broadly a phenomena in devices."

Nokia's chief, who is scheduled to leave the company in June to take the top job at

Royal Dutch Shell

(RDSA)

, says music phone sales will be "accelerating in the second half. We have very positive expectations there and volume will be significant," says Ollila.

The Finnish phonemaker

posted solid fourth-quarter results Thursday. Nokia made 1.07 billion euros ($1.31 billion), or 25 euro cents (30 cents U.S.) a share, in the quarter ended Dec. 31, compared with the year-ago 1.08 billion euros, or 24 euro cents a share. Sales rose 9% from a year ago to 10.33 billion euros ($12.66 billion). Analysts surveyed by Thomson First Call were expecting a 29-cent profit on sales of $12.16 billion.

The company claims it added a percentage point of market share in the past quarter to take its total to 33% for the year. Nokia shipped a record 265 phones in the quarter thanks to strong sales of replacement phones in Europe and growth in emerging markets like China and India.

Nokia shares fell 48 cents to $28.01 in late morning trading Thursday.