Nokia sales and profits plummet

Nokia's smart phones are losing out to Apple's iPhone

Nokia, the world's largest mobile phone maker, has reported dramatically lower quarterly profits as it struggles to combat the economic downturn.

For the final three months of 2008, the company made 576m euros (£543m), down from 1.84bn euros for the same period in 2007 - a fall of almost 69%.

Sales also fell, by 19.6%. The results were worse than analysts had expected.

The company said it would slash costs to the tune of 700m euros in an attempt to improve profitability.

Bleak outlook

"The report was bad - overall fourth quarter was weak and the beginning of 2009 looks bleak," said Fim bank analyst Mikael Schroeder.

The company blamed the poor results on the global economic slowdown that was affecting people's ability to buy new mobile phones.

"In recent weeks, the macro-economic environment has deteriorated rapidly, with even weaker consumer confidence, unprecedented currency volatility and credit tightness continuing to impact the mobile communications industry," said Nokia boss Olli-Pekka Kallasvuo.

Nokia said it expected industry-wide global mobile phone sales to fall 10% this year, compared with 2008.

Good position

The company sold 113m handsets in the quarter, 15% fewer than it did in the final three months of 2007.

But its total share of the global mobile phone market fell only slightly, from 40% to 37%.

"From an operational and structural perspective, Nokia is still in a very good position. It has a very efficient and very effective supply chain," said Neil Mawston at Strategy Analytics.

The company would, however, need to improve its smart phones in the face of increased competition from Apple's iPhone, he said.