Nokia’s first-quarter profit plunged 90 per cent as the Finnish handset maker showed its vulnerabilty to the current economic difficulties.

The world’s leading mobile manufacturer posted a net profit of just EURO €122 million (USD $161m), compared with EURO €1.22 billion (USD $1.58bn) in the year-ago period.

One bright note was sales of Nokia’s first touchscreen S60 smartphone.

The company revealed today that it has sold 2.6 million 5800 XpressMusic devices in just one quarter of availability.

Overall, however, the company’s sales fell 27 per cent to EURO €9.28bn (USD $12.2bn) for the quarter, down from EURO €12.7bn (USD $16.77bn) in the first quarter of 2008.

Handset sales were down 33 per cent to EURO €6.19 (USD $8.17bn), although the company did sell more phones than some analysts had predicted.

Nokia shipped 93.2 million devices, down sequentially from the 113.1 million units it shipped in the fourth quarter of 2008 and down 19 per cent from the 115 million it sold in the year-ago quarter.

Nokia’s market share remained steady at 37 per cent.

While the Finnish giant’s result are hardly impressive, it isn’t alone in suffering from the downturm.

Equally, the results were better than widely expected, which led to shares in the company rising by 8 per cent.

Nokia sold 13.7 million converged (S60) devices, down from 14.6 million in Q1 2008 and 15.1 million in Q4 2008, of these 5 million were Nseries and 3 million were Eseries.

Nokia’s industry outlook sees similar device volumes and market share for Q2, but expect overall conditions to improve in the second half of the year

Olli-Pekka Kallasuvo, Nokia CEO, said:

"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. Combined, these solutions will drive our future growth. As an example in Q1, I am especially pleased with the performance of our first mass market touch product, the Nokia 5800 XpressMusic. Together with Comes With Music, it is a great example of Nokia providing solutions that consumers value.

Regarding the health of the overall mobile device market, the inventory already in the sales channels decreased substantially during Q1 due to extensive destocking by operators and distributors. This adversely impacted our sales volumes in the quarter. However, it has also resulted in the demand picture becoming more predictable as we enter the second quarter."

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