Nokia Income Down but Outlook Rosier

Nokia on Thursday reported a net income of €1.1 billion (US$1.75 billion) for the second quarter, missing analysts' expectations of €1.26 billion, and down 61 percent compared to a year ago.

But at the same time it reported higher than expected revenue, and Nokia CEO Olli-Pekka Kallasvuo described a more positive outlook for the rest the year than when he last offered such projections.

Revenue was at €13.2 billion, up 4 percent year on year, compared to analyst's expectations at €12.7 billion.

Nokia increased its device market share during the second quarter, selling 122 million units, up 21 percent year on year, according to Kallasvuo.

Nokia expects industry mobile device volumes in 2008 to grow 10 percent or more from the approximately 1.14 billion units Nokia estimated for 2007.

As expected the average sales price per phone continued to fall. It now stands at €74, down from €79, during the first quarter during 2008. About 40 percent of the decline was due to the impact of the weak U.S. dollar, which continues to hurt the phone giant and other non-U.S. companies.

In Europe the market continues to be challenging, but there is some good news in North America, where Nokia is showing an improvement. "Even if minimal, showing an improvement shows the commitment that Nokia has in growing its presence in this market," said Carolina Milanesi, research director at Gartner.

What Nokia now needs to come out with is compelling high-end devices that will help improve sales in Western Europe and improve overall average sales price per unit, according to Milanesi.