Nokia’s New Phones Ring Up Strong Q1

Mobile phone giant Nokia beat its first-quarter forecast thanks to strong sales of handset, especially those with color screens and multimedia capabilities.

The results come a day after decent first-quarter numbers from Motorola and Texas Instruments (specifically its mobile phone chip unit).

“Profits in our mobile phone business exceeded our expectations, rising 9 percent on very healthy margins of 24 percent,” said Jorma Ollila, Nokia’s chairman and CEO.

During the first three months of the year, Nokia announced 17 new mobile phones, including the 3650 imaging smart phone, which can record and stream video, and the 3510i, which features a color screen. Nokia also added games during the quarter with the launch of Nokia N-Gage.

But not all the news was good. Sales from its network infrastrcuture unit, Nokia Network, continue to slide, dropping 15 percent during the first quarter. The biggest decline came in Europe and Asia-Pacific. The U.S. market was slightly better.

“(We) do not expect (network infrastructure) market conditions to improve during the year,” the company said. “Operator investment has decreased to an exceptionally low level, and in some cases network rollouts have slowed.”

The bleak outlook prompted Nokia to announce cuts of 2,350 jobs in that unit, as well as streamline research and development facilities.

Still, anticipated growth in mobile phones should offset the network decline. Nokia expects to add to its 38 percent mobile phone market share in the second quarter.

Nokia may be the exception rather than the rule for handset sales however. Despite beating its first-quarter number, Motorola sounded a cautious note during a conference call with analysts. The company, based outside Chicago, lowered its handset forecast from 430 million, after previously saying it could be as high as 440 million.

“We find little encouraging news in (Motorola’s) results or in its guidance and we believe its commentary on handset inventory and pricing pressue will be repeated in coming days and weeks by other companies in the sector,” analysts at Deutsche Bank Securities said in a note to investors.

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