Nokia profit plunges 90 percent in Q1

HELSINKI - Nokia Corp. on Thursday said profits plummeted 90 percent in the first quarter because of fading demand for mobile phones amid the worldwide downturn _ but its shares surged as analysts had expected an even gloomier report.

The world's top mobile phone maker said net profit was only euro122 million ($161 million) compared to euro1.2 billion in the same period last year.

Sales fell 27 percent to euro9.3 billion ($12.2 billion), from euro12.7 billion in the first quarter of 2008.

Still, Nokia sold more phones than some had expected, and shares rose more than 7 percent to euro10.85 in Helsinki.

"It was really a relief. Although their performance was bad, it wasn't as bad as expected," said Neil Mawston from Strategy Analytics in London. "Everyone talked Nokia down, so there was a general relief that things weren't that bad after all."

Nokia's handset sales did plunge 33 percent in January through March to euro6.2 billion ($8.17 billion). That left Nokia with a 37 percent market share, unchanged from the previous quarter but down 2 percentage points from the first quarter of 2008.

The company sold 93 million devices in the period, down 19 percent from 115 million in the year-ago quarter but more than the market expected.

"They were definitely ahead of our expectations and they were ahead of consensus expectations as well. The market was expecting 90 to 91 million and we were at 92 million and they came in at 93 million. That seems to be the core driver," Mawston said.

Nokia maintained its previous estimate that mobile device market would shrink by 10 percent this year and held on to its target of boosting market share. However, it downgraded its outlook for the network infrastructure market, saying it expects a 10 percent contraction in 2009. Nokia, which has a joint network unit with Siemens AG of Germany, had earlier predicted that market would decline 5 percent this year.

Nokia has fared better than many rivals during the world economic slump. But it, too, has been hit by falling demand. Last month it announced 1,700 layoffs worldwide.

"In what has been an exceptionally tough environment, we continue to invest in a focused manner in consumer Internet services delivered across our broad portfolio of mobile devices," chief executive Olli-Pekka Kallasvuo said. "Combined these solutions will drive our future growth."

Kallasvuo said he was "especially pleased" with the performance of the Nokia5800, a touch-screen music phone that rivals Apple's iPhone.

A service of the Associated Press(AP)