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Nokia posts slight drop in fourth-quarter profit

Nokia Corp, the world's leading mobile phone maker, posted a 1-percent drop in fourth-quarter earnings.

india Updated: Jan 27, 2006 10:39 IST
Associated Press
Associated Press

Nokia Corp, the world's leading mobile phone maker, posted a 1-per cent drop in fourth-quarter earnings on Friday, as higher sales of low-end handsets pushed down the average selling price.

Net profit for the October-December period came to€1.07 billion ($1.32 billion), down from €1.08 billion a year earlier.

Net sales grew 9 per cent to €10.3 billion ($12.66 billion), from 9.46 billion in the last quarter of 2004, Nokia said.

Analysts said the results were mostly in line with expectations, but Nokia shares fell 2.9 per cent at €14.68 ($18.05) in late trading in Helsinki.

Nokia saw the average selling price, or ASP, of handsets, drop to €99 in the quarter, down from €102 in the third quarter and €111 in the fourth quarter of 2004.

The Finnish company expects ASP to be flat or slightly down in the first quarter of 2006, but Chief Executive Jorma Ollila said he was not concerned.

"The fall in the ASP ... Will, of course, continue for a while, and that's a good thing because in the emerging markets a majority of handsets are being sold to people who have never conducted a single telephone conversation in their lives," Ollila said.

"The price really has to come down so that we can serve the great majority of the world's population."

Gartner principal analyst Carolina Milanesi said the price drop was expected and part of an industry-wide trend.

"It's the mixture of products with more basic phones being sold in emerging markets and that's gonna shift your ASP," Milanesi said.

First Published: Jan 27, 2006 10:39 IST