Nokia reports stellar profits, signals job cuts

HELSINKI (AFP) – The world's top mobile phone maker Nokia announced 1,800 jobs cuts right on the heels of stellar third-quarter results on Thursday, just one month after a new chief executive took the helm.

Nokia's return to profit, posting an unexpected 529 million euros (741 million dollars), far outstripped the expectations of analysts polled by Dow Jones Newswires, who on average predicted a net profit of less than 300 million euros.

Nokia shares jumped 6.9 percent to 8.25 euros in early afternoon trading on a Helsinki stock exchange up 2.37 percent, as investors reacted to the marked improvement over the 559 million-euro loss posted for the third quarter in 2009.

Net sales of 10.27 billion euros were meanwhile in line with industry expectations for the quarter.

"The good numbers are largely a result of an increase in the average price of phones," said Pohjola Bank senior equity analyst Hannu Rauhala, who added that the better-than-expected results bode well for the rest of the year.

But the good news was tempered by the quick release of another statement, where the company justified 1,800 planned job cuts with among other things its need to streamline its Symbian smartphones division.

"The plans include simplifying operations in product creation in Nokia's Symbian Smartphones organization, as well as Nokia's Services organization and certain corporate functions," the company said in a statement.

And despite the company's good showing, Nokia's third-quarter results are in many respects merely a place-holder in the company's tumultuous year, as it waits for its introduction last month of new chief executive Stephen Elop as well as its new N8 smartphone to truly make their impact felt.

The company hopes that under Elop's leadership, Nokia will be able to take its Symbian-based, and later MeeGo-based smartphones into the battle and regain the market share that has been chipped away by the iPhone, Blackberry, and Android-based phones.

If fact, Nokia continued to take a beating in market share in the third quarter, which dropped to 30 percent, compared to 34 percent for the same period last year and 33 percent in the second quarter of 2010.

The company, which had previously said it expected its full-year market share to remain flat in 2010, said Thursday it now expected its market share this year to slip slightly compared to 2009.

The announcement that Nokia intends to cut back its Symbian product creation division was followed by another statement, where the company said it would be focussing on developing the Qt framework, which offers a cross-platform application framework and user interface that can service both Symbian and MeeGo platforms.

"For developers, it will open up a huge installed customer base for their applications. For consumers, it means a more compelling engagement with their Nokia product in terms of access to the best applications in the marketplace and a constantly improving product experience," chief technical officer of Nokia Rich Green said.

This essentially abandons the idea of further incarnations of Symbian, which has been seen as an outdated technology, unable to keep up with faster and easier-to-use operating systems of Nokia's top competitors.

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