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Sunday 19th of April 2009
April 16, 2009

Nokia’s future uncertain as profits fall by 90%


by Peter Charalambous
”Nokia’s

Nokia, the largest mobile phone company is struggling through the recession as sales have slumped leaving huge holes in sales forecasts as revenues have fallen by 27 percent to just €9.3bn (£8.2bn).

This has been caused by the fact that 18 million fewer handsets were sold in the first quarter of 2009 - a fall of 19 percent.

Furthermore, a worse-than-expected 90% fall in quarter one profits were the group’s worst results in over seven years.

Mobile phone companies have been some of the hardest hit in the recession as consumers tighten their belts and this has been especially true for Nokia, whereby high end users are affected the most.

Compared to their main rivals, Nokia is holding up well as profit margins are still high and the company has also managed to reassure shareholders that the decline in the mobile market will bottom out by the end of 2009. This meant that Nokia shares rose 9.5 per cent to €11.05 on the Helsinki stock exchange.

Another form of good news is that chief executive Olli-Pekka Kallasvuo announced that inventories of unsold mobile phones have fallen in the first quarter of 2009, as the company made strategic adjustments in line with the change in levels of demand.

In order to keep up with the changing economic climate, Nokia have been quick to react having put an end to the use of sub-contractors in manufacturing and embarking on a cost cutting programme that saw 1,700 lay-offs announced just last month.

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Tags: cost-cutting, , , lay offs, Nokia, , , uncertain

 

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