Nokia Q3 2009 net sales EUR 9.8 billion, non-IFRS EPS EUR 0.17
(reported EPS EUR -0.15)
(Thomson Reuters ONE) - Corporate news announcement processed and transmitted by Hugin AS.The issuer is solely responsible for the content of this announcement. ------------------------------------------------------------------------------------ Nokia Siemens Networks non-cash asset impairments negatively impactedreported EPS by EUR 0.29Nokia CorporationInterim ReportOctober 15, 2009 at 13:00 (CET +1)The complete press release with tables is available at:http://www.nokia.com/results/Nokia_results2009Q3e.pdf+-------------------------------------------------------------------+| | || | Non-IFRS third quarter 2009 results1, 2, 3 ||-------------------+-----------------------------------------------|| | | | YoY | | QoQ || EUR million | Q3/2009 | Q3/2008 | Change | Q2/2009 | Change ||-------------------+---------+---------+--------+---------+--------|| Net sales | 9 810 | 12 239 | -19.8% | 9 913 | -1.0% ||-------------------+---------+---------+--------+---------+--------|| Devices & | | | | | || Services | 6 915 | 8 605 | -19.6% | 6 586 | 5.0% ||-------------------+---------+---------+--------+---------+--------|| NAVTEQ | 166 | 157 | 5.7% | 148 | 12.2% ||-------------------+---------+---------+--------+---------+--------|| Nokia Siemens | | | | | || Networks | 2 760 | 3 504 | -21.2% | 3 199 | -13.7% ||-------------------+---------+---------+--------+---------+--------|| | | | | | ||-------------------+---------+---------+--------+---------+--------|| Operating profit | 741 | 1 756 | -57.8% | 775 | -4.4% ||-------------------+---------+---------+--------+---------+--------|| Devices & | | | | | || Services | 787 | 1 602 | -50.9% | 802 | -1.9% ||-------------------+---------+---------+--------+---------+--------|| NAVTEQ | 43 | 29 | 48.3% | 19 | 126.3% ||-------------------+---------+---------+--------+---------+--------|| Nokia Siemens | | | | | || Networks | -53 | 177 | | 2 | ||-------------------+---------+---------+--------+---------+--------|| | | | | | ||-------------------+---------+---------+--------+---------+--------|| Operating margin | 7.6% | 14.3% | | 7.8% | ||-------------------+---------+---------+--------+---------+--------|| Devices & | | | | | || Services | 11.4% | 18.6% | | 12.2% | ||-------------------+---------+---------+--------+---------+--------|| NAVTEQ | 25.9% | 18.5% | | 12.8% | ||-------------------+---------+---------+--------+---------+--------|| Nokia Siemens | | | | | || Networks | -1.9% | 5.1% | | 0.1% | ||-------------------+---------+---------+--------+---------+--------|| | | | | | ||-------------------+---------+---------+--------+---------+--------|| EPS, EUR Diluted | 0.17 | 0.33 | -48.5% | 0.15 | 13.3% ||-------------------+-----------------------------------------------|| | || | Reported third quarter 2009 results1, 3 ||-------------------+-----------------------------------------------|| | | | YoY | | QoQ || EUR million | Q3/2009 | Q3/2008 | Change | Q2/2009 | Change ||-------------------+---------+---------+--------+---------+--------|| Net sales | 9 810 | 12 237 | -19.8% | 9 912 | -1.0% ||-------------------+---------+---------+--------+---------+--------|| Devices & | | | | | || Services | 6 915 | 8 605 | -19.6% | 6 586 | 5.0% ||-------------------+---------+---------+--------+---------+--------|| NAVTEQ | 166 | 156 | 6.4% | 147 | 12.9% ||-------------------+---------+---------+--------+---------+--------|| Nokia Siemens | | | | | || Networks | 2 760 | 3 503 | -21.2% | 3 199 | -13.7% ||-------------------+---------+---------+--------+---------+--------|| | | | | | ||-------------------+---------+---------+--------+---------+--------|| Operating profit | -426 | 1 469 | | 427 | ||-------------------+---------+---------+--------+---------+--------|| Devices & | | | | | || Services | 785 | 1 602 | -51.0% | 763 | 2.9% ||-------------------+---------+---------+--------+---------+--------|| NAVTEQ | -68 | -80 | | -100 | ||-------------------+---------+---------+--------+---------+--------|| Nokia Siemens | | | | | || Networks | -1 107 | -1 | | -188 | ||-------------------+---------+---------+--------+---------+--------|| | | | | | ||-------------------+---------+---------+--------+---------+--------|| Operating margin | -4.3% | 12.0% | | 4.3% | ||-------------------+---------+---------+--------+---------+--------|| Devices & | | | | | || Services | 11.4% | 18.6% | | 11.6% | ||-------------------+---------+---------+--------+---------+--------|| NAVTEQ | -41.0% | -51.3% | | -68.0% | ||-------------------+---------+---------+--------+---------+--------|| Nokia Siemens | | | | | || Networks | -40.1% | 0.0% | | -5.9% | ||-------------------+---------+---------+--------+---------+--------|| | | | | | ||-------------------+---------+---------+--------+---------+--------|| EPS, EUR Diluted | -0.15 | 0.29 | | 0.10 | |+-------------------------------------------------------------------+Note 1 relating to NAVTEQ: Nokia completed the acquisition of NAVTEQCorporation on July 10, 2008. Accordingly, NAVTEQ's results for thethird quarter 2008 are not directly comparable to those for the thirdquarter 2009.Note 2 relating to non-IFRS results: Non-IFRS results excludespecial items for all periods. In addition, non-IFRS results excludeintangible asset amortization, other purchase price accountingrelated items and inventory value adjustments arising from i) theformation of Nokia Siemens Networks and ii) all business acquisitionscompleted after June 30, 2008. More specific information about theexclusions from the non-IFRS results may be found in this pressrelease on pages 3, 14-16 and 18.Nokia believes that these non-IFRS financial measures providemeaningful supplemental information to both management and investorsregarding Nokia's performance by excluding the above-described itemsthat may not be indicative of Nokia's business operating results.These non-IFRS financial measures should not be viewed in isolationor as substitutes to the equivalent IFRS measure(s), but should beused in conjunction with the most directly comparable IFRS measure(s)in the reported results. A reconciliation of the non-IFRS results toour reported results for Q3 2009 and Q3 2008 can be found in thetables on pages 11 and 14-18 of this press release. A reconciliationof our Q2 2009 non-IFRS results can be found on pages 10 and 13-17 ofour Q2 2009 Interim Report of July 16, 2009.Note 3: Nokia reported net sales were EUR 28 996 million andearnings per share (diluted) were EUR -0.02 for the period fromJanuary 1 to September 30, 2009. Further information about theresults for the period from January 1 to September 30, 2009 can befound in this press release on pages 10, 12, 19-20 and 22.THIRD QUARTER 2009 HIGHLIGHTS- Nokia net sales of EUR 9.8 billion, down 20% year on year and down1% sequentially (down 19% and flat at constant currency).- Devices & Services net sales of EUR 6.9 billion, down 20% year onyear and up 5% sequentially (down 20% and up 6% at constantcurrency), and non-IFRS operating margin of 11.4% (18.6% in Q3 2008and 12.2% in Q2 2009).- Devices & Services gross margin of 30.9%, down from 34.0% in Q22009.- Services net sales of EUR 148 million (billings of EUR 172million). Due to the divestment of the security appliance business inApril 2009, services net sales are not directly comparable to priorperiods.- Estimated industry mobile device volumes of 288 million units, down7% year on year and up 7% sequentially.- Nokia mobile device volumes of 108.5 million units, down 8% year onyear and up 5% sequentially.- Nokia estimated mobile device market share of 38% in Q3 2009, atthe same level as in Q3 2008 and in Q2 2009.- Nokia mobile device ASP of EUR 62, at the same level as in Q2 2009.- NAVTEQ non-IFRS net sales of EUR 166 million, up 6% year on yearand up 12% sequentially, and non-IFRS operating margin of 25.9%(18.5% in Q3 2008).- Nokia Siemens Networks net sales of EUR 2.8 billion, down 21% yearon year and down 14% sequentially (down 20% and down 14% at constantcurrency), and non-IFRS operating margin of -1.9% (5.1% in Q3 2008).- Nokia operating cash flow of EUR 720 million.- Total cash and other liquid assets of EUR 7.4 billion at the end ofQ3 2009.- Nokia taxes were favorably impacted by country profit mix as wellas prior year tax benefits. If Nokia's estimated long-term tax rateof 26% had been applied, non-IFRS EPS would have been approximately 2Euro cents lower.OLLI-PEKKA KALLASVUO, NOKIA CEO:"The demand for mobile devices improved in many markets during Q3.With the average selling price of our devices holding firmquarter-on-quarter, our higher device volumes translated intoincreased net sales in our Devices & Services business. Our volumesand net sales were, however, somewhat constrained by componentshortages we encountered across the portfolio. I also want tohighlight the good operating expense management that helped thesegment deliver solid earnings.The challenging competitive factors and market conditions in theinfrastructure and related services business necessitated non-cashimpairment charges at Nokia Siemens Networks. We continue to supportNokia Siemens Networks actions to improve its performance."INDUSTRY AND NOKIA OUTLOOK- Nokia expects industry mobile device volumes in the fourth quarter2009 to be up sequentially.- Nokia expects its mobile device market share in the fourth quarter2009 to be approximately at the same level sequentially.- Nokia expects industry mobile device volumes to be approximately1.12 billion units in 2009, down approximately 7% from approximately1.21 billion units Nokia estimated for 2008. This is an update toNokia's earlier estimate of industry mobile device volumes decliningapproximately 10% in 2009 from 2008 levels.- Nokia expects its non-IFRS operating margin in Devices & Servicesin the fourth quarter 2009 to be up by one percentage point or moresequentially.- Nokia and Nokia Siemens Networks now expect the mobileinfrastructure and fixed infrastructure and related services marketto decline approximately 5% in Euro terms in 2009, from 2008 levels.This is an update to Nokia and Nokia Siemens Networks earlierexpected decline of approximately 10%.- Nokia and Nokia Siemens Networks also now expect that Nokia SiemensNetworks market share will decline by more than previously expectedin 2009, compared with 2008. This is an update to Nokia and NokiaSiemens Networks earlier expected moderate decline. Nokia and NokiaSiemens Networks continue to see strong performance in its Servicesbusiness unit expected to be offset by declines in certain productbusinesses.THIRD QUARTER 2009 FINANCIAL HIGHLIGHTS(Comparisons are given to the third quarter 2008, unless otherwiseindicated.)The non-IFRS results exclusionsQ3 2009 - EUR 1 167 million consisting of:- EUR 908 million impairment of goodwill in Nokia Siemens Networks- EUR 29 million restructuring charge and other one-time items inNokia Siemens Networks- EUR 117 million of intangible assets amortization and otherpurchase price related items arising from the formation of NokiaSiemens Networks- EUR 111 million of intangible assets amortization and otherpurchase price related items arising from the acquisition of NAVTEQ- EUR 2 million of intangible assets amortization and other purchaseprice related items arising from the acquisition of OZ Communicationsin Devices & ServicesQ3 2009 taxes - EUR 432 million valuation allowance for Nokia SiemensNetworks deferred tax assets impacting Nokia taxesQ2 2009 - EUR 348 million (net) consisting of:- EUR 22 million of impairment of intangible assets in Devices &Services- EUR 83 million restructuring charge in Devices & Services- EUR 68 million gain on sale of security appliance business inDevices & Services- EUR 69 million restructuring charge and other one-time items inNokia Siemens Networks- EUR 121 million of intangible assets amortization and otherpurchase price related items arising from the formation of NokiaSiemens Networks- EUR 119 million of intangible assets amortization and otherpurchase price related items arising from the acquisition of NAVTEQ- EUR 2 million of intangible assets amortization and other purchaseprice related items arising from the acquisition of OZ Communicationsin Devices & ServicesQ3 2008 - EUR 287 million consisting of:- EUR 59 million restructuring charge and other one-time items inNokia Siemens Networks- EUR 119 million of intangible asset amortization and other purchaseprice accounting related itemsarising from the formation of Nokia Siemens Networks- EUR 109 million of intangible asset amortization and other purchaseprice accounting related items arising from the acquisition of NAVTEQNon-IFRS results exclude special items for all periods. In addition,non-IFRS results exclude intangible asset amortization, otherpurchase price accounting related items and inventory valueadjustments arising from i) the formation of Nokia Siemens Networksand ii) all business acquisitions completed after June 30, 2008.Nokia GroupNokia's third quarter 2009 net sales decreased 20% to EUR 9.8billion, compared with EUR 12.2 billion in the third quarter 2008. Atconstant currency, Group net sales would have decreased 19% year onyear.The following chart sets out the year on year and sequential growthrates in our net sales on a reported basis and at constant currencyfor the periods indicated.+-------------------------------------------------------------------+| NOKIA THIRD QUARTER 2009 NET SALES, REPORTED & CONSTANT CURRENCY1 ||-------------------------------------------------------------------|| | Q3/2009 vs. | Q3/2009 vs || | Q3/2008 Change | Q2/2009 Change ||---------------------------+-------------------+-------------------|| Group net sales - | | || reported | -20% | -1% ||---------------------------+-------------------+-------------------|| Group net sales - | | || constant currency1 | -19% | 0% ||---------------------------+-------------------+-------------------|| | | ||---------------------------+-------------------+-------------------|| Devices & Services net | | || sales - reported | -20% | 5% ||---------------------------+-------------------+-------------------|| Devices & Services net | | || sales - constant | | || currency1 | -20% | 6% ||---------------------------+-------------------+-------------------|| | | ||---------------------------+-------------------+-------------------|| Nokia Siemens Networks | | || net sales - reported | -21% | -14% ||---------------------------+-------------------+-------------------|| Nokia Siemens Networks | | || net sales - constant | | || currency1 | -20% | -14% ||-------------------------------------------------------------------|| Note 1: Change in net sales at constant currency excludes the || impact of changes in exchange rates in comparison to the Euro, || our reporting currency. |+-------------------------------------------------------------------+Nokia's third quarter 2009 reported operating loss was EUR 426million, compared with an operating profit of EUR 1.5 billion in thethird quarter 2008. Nokia's third quarter 2009 non-IFRS operatingprofit decreased 58% to EUR 741 million, compared with EUR 1.8billion in the third quarter 2008. Nokia's third quarter 2009reported operating margin was -4.3% (12.0%). Nokia's third quarter2009 non-IFRS operating margin was 7.6% (14.3%).Operating cash flow for the third quarter 2009 was EUR 720 million,compared with EUR 1.3 billion in the third quarter 2008. Total cashand other liquid assets were EUR 7.4 billion at September 30, 2009,compared with EUR 7.2 billion at September 30, 2008. At September 30,2009, Nokia's net debt-equity ratio (gearing) was -15%, compared with-18% at September 30, 2008.Devices & ServicesIn the third quarter 2009, the total mobile device volumes of ourDevices & Services group were 108.5 million units, representing adecline of 8% year on year and a 5% increase sequentially. Theoverall industry mobile device volumes for the same period were 288million units based on Nokia's preliminary estimate, representing a7% year on year decrease and a 7% sequential increase. The lowerdevice volumes year on year for Nokia and the industry continued tobe driven by the negative impact of the deteriorated global economicconditions. The sequential industry device volume increase primarilyreflected an improved demand environment for mobile devices. Inaddition, Nokia's device volumes for the third quarter 2009 weresomewhat constrained by component shortages across the portfolio,which are expected to continue to some degree in the fourth quarter2009.Of the total industry mobile device volumes, converged mobile deviceindustry volumes in the third quarter 2009 were 47.0 million units,based on Nokia's preliminary estimate, compared with an estimated44.2 million units in the third quarter 2008 and 41.0 million unitsin the second quarter 2009. Our own converged mobile device volumeswere 16.4 million units in the third quarter 2009, compared with 15.5million units in the third quarter 2008 and 16.9 million units in thesecond quarter 2009. Nokia's share of the converged mobile devicemarket was an estimated 35% in the third quarter 2009, at the samelevel as in the third quarter 2008 and down from 41% in the secondquarter 2009. We shipped 4.5 million Nokia Nseries and 4.4 millionNokia Eseries devices during the third quarter 2009, down from thecombined 9.3 million Nseries and Eseries devices we shipped in thesecond quarter 2009.The following chart sets out our mobile device volumes for theperiods indicated, as well as the year on year and sequential growthrates, by geographic area.+-------------------------------------------------------------------+| NOKIA MOBILE DEVICE VOLUME BY GEOGRAPHIC AREA ||-------------------------------------------------------------------|| | | | YoY | | QoQ || (million units) | Q3/2009 | Q3/2008 | Change | Q2/2009 | Change ||-------------------+---------+---------+--------+---------+--------|| Europe | 27.1 | 27.4 | -1.1% | 23.3 | 16.3% ||-------------------+---------+---------+--------+---------+--------|| Middle East & | | | | | || Africa | 19.6 | 21.5 | -8.8% | 18.9 | 3.7% ||-------------------+---------+---------+--------+---------+--------|| Greater China | 18.5 | 19.8 | -6.6% | 18.6 | -0.5% ||-------------------+---------+---------+--------+---------+--------|| Asia-Pacific | 30.5 | 33.6 | -9.2% | 30.3 | 0.7% ||-------------------+---------+---------+--------+---------+--------|| North America | 3.1 | 4.5 | -31.1% | 3.2 | -3.1% ||-------------------+---------+---------+--------+---------+--------|| Latin America | 9.7 | 11.0 | -11.8% | 8.9 | 9.0% ||-------------------+---------+---------+--------+---------+--------|| Total | 108.5 | 117.8 | -7.9% | 103.2 | 5.1% |+-------------------------------------------------------------------+Based on our preliminary market estimate, Nokia's mobile devicemarket share for the third quarter 2009 was 38%, compared with 38% inthe third quarter 2008 and in the second quarter 2009. Our year onyear market share was higher in Europe, Latin America and Middle East& Africa. This was offset by lower market share in Greater China,Asia-Pacific and North America. Sequentially, our market sharedeclined in Greater China, Asia-Pacific, Middle East & Africa andNorth America, but was offset by our increased market share in Europeand Latin America.Our mobile device average selling price (ASP) in the third quarter2009 was EUR 62, down from EUR 72 in the third quarter 2008 and atthe same level as in the second quarter 2009. The year on yeardecline was primarily due to a higher proportion of sales of lowerpriced products as well as general price pressure. Sequentially, ourASP benefited from new product shipments, offset however by generalprice pressure.Third quarter 2009 Devices & Services net sales declined 20% to EUR6.9 billion, compared with EUR 8.6 billion in the third quarter 2008.Devices & Services net sales were down year on year in all geographicareas. At constant currency, Devices & Services net sales would havedecreased 20%. The net sales decline resulted primarily from lowervolumes, combined with the ASP decline, compared with the thirdquarter 2008. Of our total Devices & Services net sales, servicescontributed EUR 148 million in the third quarter 2009, representing29% year on year growth and a 6% sequential growth. Nokia completedthe divestment of its security appliances business in April 2009 andaccordingly services net sales for the third and second quarter 2009as well as for the prior periods are not directly comparable.Beginning with the third quarter 2009, we are providing additionalsequential comparative information for our Devices & Servicesbusiness to reflect our product and solutions mode of operation andperformance. We are now providing total net sales for Devices &Services divided into (i) net sales from smartphones and mobilecomputer solutions; that is, net sales of converged mobile devices,including the services and accessories sold with them, and (ii) netsales from mobile phones and embedded services; that is, net sales ofSeries 30 and Series 40-powered devices, including the services andaccessories sold with them. We are also providing ASPs for each ofthese two categories of sales. Net sales from smartphones and mobilecomputer solutions totaled EUR 3.1 billion in the third quarter 2009,at the same level as in the second quarter 2009. The ASP forsmartphones and mobile computer solutions was EUR 190, up from EUR182 in the second quarter 2009. Net sales from mobile phones andembedded services totaled EUR 3.8 billion in the third quarter 2009,compared with EUR 3.5 billion in the second quarter 2009. The ASP formobile phones and embedded services was EUR 41, at the same level asin the second quarter 2009.Devices & Services reported gross profit and non-IFRS gross profitdecreased 32% to EUR 2.1 billion, compared with EUR 3.1 billion inthe third quarter 2008, with a reported and non-IFRS gross margin of30.9% (36.5%). The year on year gross margin decrease was primarilydue to higher cost of sales driven by a stronger Japanese Yen, aswell as general price pressure.During the third quarter 2009, Devices & Services reported operatingprofit decreased 51% to EUR 785 million, compared with EUR 1.6billion in the third quarter 2008, with a reported operating marginof 11.4% (18.6%). Devices & Services non-IFRS operating profitdecreased 51% to EUR 787 million, compared with EUR 1.6 billion inthe third quarter 2008, with a non-IFRS operating margin of 11.4%(18.6%). The year on year decrease in non-IFRS operating profit forthe third quarter 2009 was due primarily to lower net sales andhigher cost of sales compared with the third quarter 2008. Thesefactors were somewhat mitigated by a reduction in our operatingexpenses, compared to the third quarter 2008.NAVTEQ(Nokia completed the acquisition of NAVTEQ Corporation on July 10,2008. Accordingly, NAVTEQ's results for the third quarter 2008 arenot directly comparable to those for the third quarter 2009.)Third quarter 2009 NAVTEQ net sales increased 6% to EUR 166 million,compared with EUR 156 million in the third quarter 2008. NAVTEQreported gross profit was EUR 146 million (EUR 138 million), with areported gross margin of 88.0% (88.5%). Non-IFRS gross profit was EUR146 million (EUR 139 million), with a non-IFRS gross margin of 88.0%(88.5%). NAVTEQ had a reported operating loss of EUR 68 million (EUR80 million loss). The reported operating margin was -41.0% (-51.3%).NAVTEQ non-IFRS operating profit was EUR 43 million (EUR 29 million),with a non-IFRS operating margin of 25.9% (18.5%).When Nokia assessed goodwill for impairment on its annual impairmenttesting date in the fourth quarter 2008, Nokia concluded that areasonably possible change of 1% in the valuation assumptions forlong-term growth rate and pre-tax discount rate would give rise to animpairment loss for NAVTEQ. Nokia conducted a review and update ofthe assumptions used in the 2008 annual impairment testing analysisand performed a sensitivity analysis on these assumptions to assessthe recoverability of NAVTEQ. This assessment resulted in noindication of impairment for NAVTEQ. However, Nokia has once againconcluded that a reasonably possible change of 1% in the valuationassumptions for long-term growth rate and pre-tax discount rate wouldgive rise to an impairment loss for NAVTEQ. Nokia continues toevaluate the financial performance and future strategies of NAVTEQ aswell as market and economic conditions to assess the recoverabilityof NAVTEQ's carrying amount. Nokia will conduct its annual goodwillimpairment testing in the fourth quarter 2009.Nokia Siemens NetworksThird quarter 2009 net sales decreased 21% to EUR 2.8 billion,compared with EUR 3.5 billion in the third quarter 2008, reflectingchallenging competitive factors and market conditions. At constantcurrency, Nokia Siemens Networks net sales would have decreased 20%.Of total Nokia Siemens Networks net sales, services contributed EUR1.3 billion.The following chart sets out Nokia Siemens Networks net sales for theperiods indicated, as well as the year on year and sequential growthrates, by geographic area.+-------------------------------------------------------------------+| NOKIA SIEMENS NETWORKS NET SALES BY GEOGRAPHIC AREA ||-------------------------------------------------------------------|| | | | YoY | | QoQ || EUR million | Q3/2009 | Q3/2008 | Change | Q2/2009 | Change ||-------------------+---------+---------+--------+---------+--------|| Europe | 1 062 | 1 358 | -21.8% | 1 209 | -12.2% ||-------------------+---------+---------+--------+---------+--------|| Middle East & | | | | | || Africa | 387 | 424 | -8.7% | 459 | -15.7% ||-------------------+---------+---------+--------+---------+--------|| Greater China | 335 | 288 | 16.3% | 353 | -5.1% ||-------------------+---------+---------+--------+---------+--------|| Asia-Pacific | 567 | 894 | -36.6% | 648 | -12.5% ||-------------------+---------+---------+--------+---------+--------|| North America | 127 | 150 | -15.3% | 208 | -38.9% ||-------------------+---------+---------+--------+---------+--------|| Latin America | 282 | 389 | -27.5% | 322 | -12.4% ||-------------------+---------+---------+--------+---------+--------|| Total | 2 760 | 3 503 | -21.2% | 3 199 | -13.7% |+-------------------------------------------------------------------+Nokia Siemens Networks reported gross profit decreased 28% to EUR 778million, compared with EUR 1.1 billion in the third quarter 2008,with a reported gross margin of 28.2% (30.8%). Nokia Siemens Networksnon-IFRS gross profit decreased 27% to EUR 794 million, compared withEUR 1.1 billion in the third quarter2008, with a non-IFRS gross margin of 28.8% (31.2%). The lower yearon year non-IFRS gross profit in the third quarter 2009 was dueprimarily to lower year on year net sales.Nokia Siemens Networks had a third quarter 2009 reported operatingloss of EUR 1 107 million, compared with an operating loss of EUR 1million in the third quarter 2008, with an operating margin of -40.1%(0.0%). The operating loss in the third quarter 2009 was primarilydriven by the EUR 908 million impairment of goodwill. Nokia SiemensNetworks non-IFRS operating loss was EUR 53 million in the thirdquarter 2009, compared with a non-IFRS operating profit of EUR 177million in the third quarter 2008, with a non-IFRS operating marginof -1.9% (5.1%). The year on year decline in Nokia Siemens Networksnon-IFRS operating profit primarily reflected lower net sales.Nokia recorded a charge to operating profit in the third quarter 2009of EUR 908 million for the impairment of goodwill in Nokia SiemensNetworks. After the impairment charge Nokia no longer carries anygoodwill with regard to Nokia Siemens Networks. An additional chargeof EUR 432 million was recorded to tax expense to provide a valuationallowance on Nokia Siemens Networks' deferred tax assets. The netimpact of the asset impairment charges after minority interesttotaled EUR 1 072 million, negatively impacting reported EPS by EUR0.29.The recoverability of the investment in Nokia Siemens Networks hasdeclined as a result of the decline in forecasted profits and cashflows. The asset impairment charges are the result of an evaluationof the historical and projected financial performance of NokiaSiemens Networks, taking into consideration the challengingcompetitive factors and market conditions in the infrastructure andrelated services business, which have resulted in lower net salesprojections and which, in turn, have reduced the projected scale andthus negatively impacted projected margins and profitability.The recognition of a valuation allowance does not impact the validityof the deferred tax assets and Nokia Siemens Networks retains thepossibility of recovering these assets if sufficient future taxableprofits become available.Q3 2009 OPERATING HIGHLIGHTS- Nokia announced the formation of Solutions, a new unit responsiblefor driving Nokia's offering of solutions, with the aim ofintegrating the mobile device, services and content into a unique andcompelling offering for the consumer. The unit formally startedoperating on October 1, 2009.- Nokia announced changes to its Group Executive Board, with RobertAndersson leaving Nokia's Group Executive Board as of September 30,2009 in connection with his transfer to new duties in Nokia'sCorporate Development unit from October 1, 2009; Alberto Torresjoining Nokia's Group Executive Board as of October 1, 2009 inconnection with his appointment as head of Solutions, and; SimonBeresford-Wylie leaving the Group Executive Board on September 30,2009 after stepping down as Chief Executive Officer of Nokia SiemensNetworks.- Nokia announced that Rajeev Suri had been appointed as ChiefExecutive Officer of Nokia Siemens Networks as of October 1, 2009.- Nokia was named as the world's most sustainable technology companyaccording to the 2009-10 edition of the prestigious Dow JonesSustainability Indexes that went live during September. Already ratedfor several years as the leader within the Europe and Communicationscategories, this year Nokia was also chosen as "World TechnologySupersector Leader" making it number one across the entire globaltechnology sector.- Nokia announced that a United States International Trade Commission(ITC) judge issued an Initial Determination in favor of Nokia in theaction brought by InterDigital against Nokia. The judge's InitialDetermination is consistent with a previous judgment in the UnitedKingdom that found several InterDigital patents not to be essentialto the UMTS mobile standard.Devices & Services- Nokia acquired certain assets of cellity, a mobile software companythat has developed a solution for aggregating address book data, aswell as certain assets of Plum Ventures, Inc, a privately heldcompany that develops and operates a cloud-based social media sharingand messaging service for private groups. Nokia also acquired DopplrOy, a privately-held mobile service provider for internationaltravelers. All three acquisitions enable Nokia to accelerate thedelivery of Ovi services and bring additional internet servicestalent to its Services unit.- Nokia announced Nokia Money, a new mobile financial service givingmobile device users access to basic financial services. The serviceis to be rolled out gradually to selected markets in early 2010 andwill be operated in cooperation with Obopay, a leading developer ofmobile payment solutions in which Nokia invested earlier this year.- Nokia announced a global alliance with Microsoft to design andmarket a suite of productivity applications for Nokia's range ofSymbian smartphones, starting with Nokia's business-optimized Eseriesrange of devices.- Nokia announced the Nokia N900, a handset that deliverscomputer-grade performance in a compact QWERTY and touch form factor.The Nokia N900 runs on Maemo, a desktop PC-like software architecturebased on the open source Linux software.- Nokia announced the Nokia Booklet 3G, a new Windows 7-basedmini-laptop. The Nokia Booklet 3G is encased in an ultra-portablealuminum chassis, runs for up to 12 hours on a single charge and hasa broad range of connectivity options.- Nokia announced the Nokia N97 mini, a companion to the Nokia N97.The Nokia N97 mini will be the first device to feature Ovilifecasting, an application developed together with Facebook thatenables people for the first time to publish their location andstatus updates directly to their Facebook account from the homescreen of a mobile device.- Nokia announced the Nokia X6, a powerful entertainment device with32GB of on-board memory that, in select markets, will be available incombination with Comes With Music, Nokia's 'all-you-can-eat-music'offering. Nokia also announced the Nokia X3, an affordable musicdevice and the first Series 40-powered device enabled for Ovi Store,Nokia's store for applications and content.- Nokia announced the Nokia 5230, an affordable touch smartphonethat, in select markets, will also be available in combination withComes With Music.- Nokia launched Comes With Music in Austria, the Netherlands andSouth Africa during the quarter, with the offering now available on17 Nokia devices across 12 countries altogether. Additionally, Nokialaunched Nokia Music Store in India during the quarter, with thechain of digital music stores now localized for 22 countries.- Nokia announced the Nokia 5800 Navigation Edition, a touch handsetpreloaded with a lifetime of voice-guided Drive and Walk navigationlicenses for the user's region.- Nokia announced and commenced shipments of the Nokia 3720 classic,a rugged handset designed to resist water, dust and shock.- Nokia Messaging, Nokia's consumer email service, continued to gaintraction among operators with six new agreements announced during thequarter. Nokia Messaging is now available to Nokia users in more than50 countries and approximately 1 million users are now registered.Additionally, more than 2 million people have now activated an OviMail account. Ovi Mail is an email solution developed especially forconsumers in emerging markets.- Nokia announced the Ovi SDK Beta, the Ovi Maps Player API formobile and Ovi Navigation Player API, enabling the creation of richapplications for the web as well as the Symbian and Maemo platforms,and which will be distributed through the Ovi Store. Ovi developertools are a key focus area as we continue to expand our servicesoffering for consumers and create opportunities for developers andcontent providers.NAVTEQ- NAVTEQ announced the European availability of Motorway JunctionObjects, which enables navigation systems to display full 3Danimation of complex junctions, with coverage of over 6 000locations.- NAVTEQ significantly increased major city coverage for its Indiamap, now encompassing 84 cities.- NAVTEQ announced that NAVTEQ Discover Cities(TM) reached a globalpedestrian navigation milestone of 100 cities with the addition ofJohannesburg.- NAVTEQ acquired Acuity, a US-based company with a leading mobilelocation-based advertising delivery platform. The acquisitionunderscores NAVTEQ's commitment to and investment in location-basedadvertising technology and solutions.- NAVTEQ launched real time traffic in 11 European countries andexpanded NAVTEQ Traffic Patterns(TM) to 9 European countries.- NAVTEQ announced the integration of Nokia GPS data for availabilityin NAVTEQ traffic products in North America and Europe.- NAVTEQ along with Nokia and Magnetti Marelli announced innovativetechnology to integrate smartphones into car infotainment systems.- NAVTEQ announced that Nextar selected NAVTEQ Location Point(TM) tooffer their consumers a lifetime of free traffic supported bytargeted location-based advertising.Nokia Siemens Networks- Globe Telecommunications, one of the leading communication serviceproviders in the Philippines can now offer Web 2.0 services and rollout new promotional service packages up to 10 times faster thanbefore after Nokia SiemensNetworks, in collaboration with IBM, implemented a Service DeliveryFramework for the operator, which offers an agile and efficientservice creation environment, and reduces the time to market for newservices.- Nokia Siemens Networks in September made the world's first LTE callusing commercial base station and fully standard compliant,commercial software. The successful demonstration, as well as thefact that Nokia Siemens Networks had delivered LTE-compatible FlexiBase Station hardware to over 100 customers by end September,illustrates the readiness of Nokia Siemens Networks' products forearly commercial deployments worldwide.- Nokia Siemens Networks continued to make inroads in North Americawith a 3G network roll out deal in Canada for Globalive Wireless thatincludes a services-led turnkey deal for the implementation,maintenance, design and service assurance as well as a system-leddeal for the WCDMA network.- Nokia Siemens Networks won a number of other key 3G deals in thequarter including a contract with Megafon in Russia as the mainsupplier for the extension of its 3G radio network, and deals withViettel in Vietnam, Hutchison 3G Austria, Nuevatel in Bolivia,T-Mobile in the Czech Republic and Hutchison Telecom in Hong Kong.- In fixed line, Nokia Siemens Networks was appointed by BelgacomInternational Carrier Services to upgrade its optical networktransmission capacity from 10 Gigabit per second (Gbps) perwavelength to 40 Gbps. Other deals included an upgrade for CeskéRadiokomunikace for data rates of up to 10 Gbps and a 4 000 kmextension of a nationwide fiber backbone network for Zain Nigeria.- Nokia Siemens Networks demonstrated DSL with download speeds of 25Mbps at a distance of up to 1 500 meters from the local exchange atBroadband World Forum in Paris with its VDSL2 bonding solution.For more information on the operating highlights mentioned above,please refer to related press announcements at the following links:http://www.nokia.com/press, http://www.navteq.com/about/press.html,http://www.nokiasiemensnetworks.com/pressNOKIA IN THE THIRD QUARTER 2009(The following discussion is of Nokia's reported results. Comparisonsare given to the third quarter 2008 results, unless otherwiseindicated.)Nokia's net sales decreased 20% to EUR 9 810 million (EUR 12 237million). Net sales of Devices & Services decreased 20% to EUR 6 915million (EUR 8 605 million). Net sales of NAVTEQ increased 6% to EUR166 million(EUR 156 million). Net sales of Nokia Siemens Networks decreased 21%to EUR 2 760 million (EUR 3 503 million).Operating loss was EUR 426 million (compared with an operating profitof EUR 1 469 million), representing an operating margin of -4.3%(12.0%). Operating profit in Devices & Services decreased 51% to EUR785 million (EUR 1 602 million), representing an operating margin of11.4% (18.6%). Operating loss in NAVTEQ was EUR 68 million (loss ofEUR 80 million), representing an operating margin of -41.0% (-51.3%).Operating loss in Nokia Siemens Networks was EUR 1 107 million (lossof EUR 1 million), representing an operating margin of -40.1% (0.0%).The operating loss in Nokia Siemens Networks included anon-deductible impairment of goodwill charge of EUR 908 million.Corporate Common Functions reported expense totaled EUR 36 million(EUR 52 million).In the third quarter 2009, net financial expense was EUR 48 million(net financial expense EUR 57 million). Loss before tax was EUR 469million (profit of EUR 1 410 million). The results after taxesincluded a charge of EUR 432 million recorded to provide a valuationallowance on Nokia Siemens Networks' deferred tax assets. Loss wasEUR 913 million (profit of EUR 1 055 million), based on a loss of EUR559 million (profit of EUR 1 087 million) attributable to equityholders of the parent and a negative EUR 354 million (negative EUR 32million) attributable to minority interests. Earnings per sharedecreased to EUR -0.15 (basic) and EUR -0.15 (diluted), compared withEUR 0.29 (basic) and EUR 0.29 (diluted) in the third quarter of 2008.NOKIA IN JANUARY - SEPTEMBER 2009(The following discussion is of Nokia's reported results. Comparisonsare given to the January-September 2008 results, unless otherwiseindicated.)Nokia's net sales decreased 24% to EUR 28 996 million (EUR 38 048million). Net sales of Devices & Services decreased 27% to EUR 19 674million (EUR 26 958 million). Net sales of NAVTEQ were EUR 445million. Net sales of Nokia Siemens Networks decreased 18% to EUR 8949 million (EUR 10 971 million).Operating profit decreased 99% to EUR 56 million (EUR 4 474 million),representing an operating margin of 0.2% (11.8%). Operating profit inDevices & Services decreased 59% to EUR 2 095 million (EUR 5 050million), representing an operating margin of 10.6% (18.7%).Operating loss in NAVTEQ was EUR 288 million, representing anoperating margin of -64.7%. Operating loss in Nokia Siemens Networkswas EUR 1 656 million (loss of EUR 122 million), representing anoperating margin of -18.5% (-1.1%). The operating loss in NokiaSiemens Networks included a non-deductible impairment of goodwillcharge of EUR 908 million. Corporate Common Functions reportedexpense totaled EUR 95 million (EUR 374 million).In the period from January to September 2009, net financial expensewas EUR 186 million (net financial income EUR 14 million). Lossbefore tax was EUR 101 million (profit of EUR 4 494 million). Theresults after taxes included a charge of EUR 432 million recorded toprovide a valuation allowance on Nokia Siemens Networks' deferred taxassets. Loss was EUR 622 million (profit of EUR 3 338 million), basedon a loss of EUR 57 million (profit of EUR 3 412 million)attributable to equity holders of the parent and a negative EUR 565million (negative EUR 74 million) attributable to minority interests.Earnings per share decreased to EUR -0.02 (basic) and EUR -0.02(diluted), compared with EUR 0.91 (basic) and EUR 0.90 (diluted) inJanuary-September 2008.PERSONNELThe average number of employees during January-September 2009 was 123139, of which the average number of employees at Nokia SiemensNetworks was 61 575. At September 30, 2009, Nokia employed a total of123 347 people (123 006 September 30, 2008), of which 63 943 wereemployed by Nokia Siemens Networks (60 183 people at September 30,2008).SHARESThe total number of Nokia shares at September 30, 2009 was 3 744 956052. At September 30, 2009, Nokia and its subsidiary companies owned37 380 257 Nokia shares, representing approximately 1.0% of the totalnumber of Nokia shares and the total voting rights.1 EUR = 1.459 USDThe unaudited, consolidated interim financial statements of Nokiahave been prepared in accordance with the International FinancialReporting Standards ("IFRS"). The same accounting policies andmethods of computation are followed in the interim financialstatements as were followed in the consolidated financial statementsof Nokia for 2008.The complete press release with tables is available at:http://www.nokia.com/results/Nokia_results2009Q3e.pdfFORWARD-LOOKING STATEMENTSIt should be noted that certain statements herein which are nothistorical facts, including, without limitation, those regarding: A)the timing of product, services and solution deliveries; B) ourability to develop, implement and commercialize new products,services, solutions and technologies; C) our ability to develop andgrow our consumer Internet services business; D) expectationsregarding market developments and structural changes; E) expectationsregarding our mobile device volumes, market share, prices andmargins; F) expectations and targets for our results of operations;G) the outcome of pending and threatened litigation; H) expectationsregarding the successful completion of contemplated acquisitions on atimely basis and our ability to achieve the set targets upon thecompletion of such acquisitions; and I) statements preceded by"believe," "expect," "anticipate," "foresee," "target," "estimate,""designed," "plans," "will" or similar expressions areforward-looking statements. These statements are based onmanagement's best assumptions and beliefs in light of the informationcurrently available to it. Because they involve risks anduncertainties, actual results may differ materially from the resultsthat we currently expect. Factors that could cause these differencesinclude, but are not limited to: 1) the deteriorating global economicconditions and related financial crisis and their impact on us, ourcustomers and end-users of our products, services and solutions, oursuppliers and collaborative partners; 2) the development of themobile and fixed communications industry, as well as the growth andprofitability of the new market segments that we target and ourability to successfully develop or acquire and market products,services and solutions in those segments; 3) the intensity ofcompetition in the mobile and fixed communications industry and ourability to maintain or improve our market position or respondsuccessfully to changes in the competitive landscape; 4)competitiveness of our product, services and solutions portfolio; 5)our ability to successfully manage costs; 6) exchange ratefluctuations, including, in particular, fluctuations between theeuro, which is our reporting currency, and the US dollar, theJapanese yen, the Chinese yuan and the UK pound sterling, as well ascertain othercurrencies; 7) the success, financial condition and performance ofour suppliers, collaboration partners and customers; 8) our abilityto source sufficient amounts of fully functional components,sub-assemblies, software and content without interruption and atacceptable prices; 9) the impact of changes in technology and ourability to develop or otherwise acquire and timely and successfullycommercialize complex technologies as required by the market; 10) theoccurrence of any actual or even alleged defects or other quality,safety or security issues in our products, services and solutions;11) the impact of changes in government policies, trade policies,laws or regulations or political turmoil in countries where we dobusiness; 12) our success in collaboration arrangements with othersrelating to development of technologies or new products, services andsolutions; 13) our ability to manage efficiently our manufacturingand logistics, as well as to ensure the quality, safety, security andtimely delivery of our products, services and solutions; 14)inventory management risks resulting from shifts in market demand;15) our ability to protect the complex technologies, which we orothers develop or that we license, from claims that we have infringedthird parties' intellectual property rights, as well as ourunrestricted use on commercially acceptable terms of certaintechnologies in our products, services and solutions; 16) our abilityto protect numerous Nokia, NAVTEQ and Nokia Siemens Networkspatented, standardized or proprietary technologies from third-partyinfringement or actions to invalidate the intellectual propertyrights of these technologies; 17) any disruption to informationtechnology systems and networks that our operations rely on; 18)developments under large, multi-year contracts or in relation tomajor customers; 19) the management of our customer financingexposure; 20) our ability to retain, motivate, develop and recruitappropriately skilled employees; 21) whether, as a result ofinvestigations into alleged violations of law by some formeremployees of Siemens AG ("Siemens"), government authorities or otherstake further actions against Siemens and/or its employees that mayinvolve and affect the carrier-related assets and employeestransferred by Siemens to Nokia Siemens Networks, or there may beundetected additional violations that may have occurred prior to thetransfer, or violations that may have occurred after the transfer, ofsuch assets and employees that could result in additional actions bygovernment authorities; 22) any impairment of Nokia Siemens Networkscustomer relationships resulting from the ongoing governmentinvestigations involving the Siemens carrier-related operationstransferred to Nokia Siemens Networks; 23) unfavorable outcome oflitigations; 24) allegations of possible health risks fromelectromagnetic fields generated by base stations and mobile devicesand lawsuits related to them, regardless of merit; as well as therisk factors specified on pages 11-28 of Nokia's annual report onForm 20-F for the year ended December 31, 2008 under Item 3D. "RiskFactors." Other unknown or unpredictable factors or underlyingassumptions subsequently proving to be incorrect could cause actualresults to differ materially from those in the forward-lookingstatements. Nokia does not undertake any obligation to publiclyupdate or revise forward-looking statements, whether as a result ofnew information, future events or otherwise, except to the extentlegally required.Nokia, Helsinki - October 15, 2009Media and Investor Contacts:Corporate Communications, tel. +358 7180 34900Investor Relations Europe, tel. +358 7180 34289Investor Relations US, tel. +1 914 368 0555- Nokia plans to publish its fourth quarter 2009 results on January28, 2010.- Nokia plans to report its other quarterly results in 2010 on thefollowing dates: Q1 on April 22, Q2 on July 22 and Q3 on October 21,2010.- Nokia plans to publish its annual report, Nokia in 2009, in week 12of 2010- Nokia's Annual General Meeting is scheduled to be held on May 6,2010.www.nokia.com --- End of Message ---NOKIAP.O. Box 226
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Datum: 15.10.2009 - 12:00 Uhr
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