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Nokia Lowers Mobile Device Industry Outlook
Posted: 04-Dec-2008 [Source: Nokia]

[Nokia lowers Q408 mobile device industry volumes - gives outlook for 2009 at Capital Markets Day event.]

New York -- Today, at its annual Capital Markets Day event, Nokia lowered its forecast for mobile device industry volumes for the fourth quarter 2008. Nokia also presented forecasts for the company and the industry for 2009. At the event, senior company executives outlined how Nokia's strategy, robust financial structure and competitive product portfolio are expected to ensure the company remains in a position of strength in the more challenging economic times ahead.

Nokia President and CEO, Olli-Pekka Kallasvuo, highlighted the benefits of Nokia's brand, scale and number one market position, stating: "2009 will be challenging for our industry, however we have a strong, enviable base to build on and I believe we will continue to strengthen our position on many fronts. Building on our operational flexibility, Nokia is acting to reduce costs appropriately in the current slowing environment. At the same time, we remain fully committed to making the investments to build the future of our exciting industry and Nokia's continued competitiveness."

Nokia CFO, Rick Simonson, emphasized that appropriate cost reductions are being effected now and are continuing in plans for 2009 and 2010: "Nokia's highly variable, low fixed cost business model allows us to scale to a declining market. We are also acting on all fronts to reduce our costs beyond what may be attributable solely to the scalable aspects of the business model - moving to reduce cost of goods sold even further, reduce operational expenditure appropriately, and scale back capital expenditure. We expect these strong actions to offset, in part, the negative impact of slowing sales."

Outlook for Nokia and the mobile device industry - fourth quarter 2008

The mobile device market slowdown has continued more rapidly than previously expected since Nokia issued an update on November 14, 2008. The industry continues to be impacted by the effects of a global consumer pull-back in spending, currency volatility, and decreased availability of credit. Nokia believes the slowdown is apparent in varying degrees across all markets, while the most recent incremental impact in the emerging markets has been more pronounced than in other markets. As a result, and while noting the lack of visibility due to the factors cited above, Nokia is revising its fourth quarter 2008 outlook as follows:

- Nokia now estimates that fourth quarter 2008 industry mobile device volumes will be lower than the previous estimate of approximately 330 million units, which would result in full year 2008 industry mobile device volumes below the earlier estimate of 1.24 billion units.

- Nokia believes there is insufficient visibility in the marketplace to confirm its prior estimate for its fourth quarter 2008 mobile device market share, which was expected to be at the same level or slightly up from an estimated 38% in the third quarter 2008.

Outlook for Nokia Siemens Networks and the mobile infrastructure, fixed infrastructure and related services market - 2008

- Nokia and Nokia Siemens Networks continue to expect the mobile infrastructure, fixed infrastructure and related services market to be flat in euro terms in 2008, compared to 2007.

- Nokia and Nokia Siemens Networks continued cost synergy target for Nokia Siemens Networks is to achieve substantially all of the EUR 2.0 Billion of targeted annual cost synergies by the end of 2008.

Targets and forecasts for Nokia and the mobile device industry - 2009 and going forward

- Nokia expects that the mobile device market will continue to be negatively impacted by the effects of a slowdown in consumer spending. Nokia also expects that operator and retail distribution channels will go through a period of destocking, resulting in lower sales volumes by manufacturers (sell-in) than purchase volumes by consumers (sell- through) for the industry in the first half of 2009.

- While noting the extremely limited visibility, Nokia expects 2009 industry mobile device volumes to decline 5% or more from 2008 levels.

- Nokia expects the four billion mobile subscriptions mark to be reached in the first quarter 2009.

- Nokia targets an increase in its market share in mobile devices in 2009 compared to 2008, including increased share in smartphones.

- As previously announced, Nokia has adjusted its Internet services market focus to the areas of music, maps, media, messaging and gaming. Nokia estimates these targeted portions of the Internet services market will be approximately EUR 40 billion in 2011. In December 2007, Nokia estimated that the total Internet services market would be approximately EUR 100 billion in 2010.

- Nokia targets Services & Software net sales of EUR 2 billion or more in 2011.

- Nokia targets its Services & Software business to have 300 million unique services users by 2012.

Targets and forecasts for Nokia Siemens Networks and the mobile infrastructure, fixed infrastructure and related services market - 2009

- Nokia and Nokia Siemens Networks preliminary estimate is that the mobile infrastructure, fixed infrastructure and related services market will decline 5% or more in euro terms in 2009, from 2008 levels.

- Nokia and Nokia Siemens Networks target for Nokia Siemens Networks market share to remain constant in 2009, compared to 2008.

Nokia financial targets (non-IFRS*) - 2009

Given the unprecedented environment, Nokia will not, at this time, be giving operating margin targets for beyond 2009.

- Nokia Devices & Services operating margin target to be in the teens in 2009.

- NAVTEQ operating margin targeted to be somewhat above the Devices & Services operating margin in 2009.

- Nokia Siemens Networks operating margin target to be in the single digits in 2009.

Nokia priorities for 2009

In addition to updating its financial targets, Nokia also outlined key priorities for 2009.

These are:

- To ensure that Nokia's cost base is appropriately sized for a more challenging environment;

- To grow mobile device market share, to capture growth opportunities in NAVTEQ and device enhancements, and to capture value from adjacent markets;

- To build on the momentum in Services & Software by continuing to grow and focus its services portfolio;

- To mobilize consumer email and consumer instant messaging for millions of Nokia device users, and;

- To further integrate and simplify Nokia's web services user interface and device user interface.

* Non-IFRS results exclude special items for all periods. In addition, non-IFRS results exclude intangible asset amortization, other purchase price accounting related items and inventory value adjustments arising from the formation of Nokia Siemens Networks and from all business acquisitions completed after June 30, 2008. For the preceding periods, non-IFRS results exclude such items and adjustments arising from the formation of Nokia Siemens Networks only. Nokia believes that these non-IFRS financial measures provide meaningful supplemental information to both management and investors regarding Nokia's performance by excluding the above-described items that may not be indicative of Nokia's business operating results. These non-IFRS financial measures should not be viewed in isolation or as substitutes to the equivalent IFRS measure(s), but should be used in conjunction with the most directly comparable IFRS measure(s) in the reported results.

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