Shares in Nokia rose sharply yesterday after the world's largest maker of mobile phones reported stronger than expected second-quarter results, selling in excess of 100 million handsets in the period - more than its three closest rivals combined.
The Finnish company said revenues and profit margins increased as it continued to expand its share in crucial emerging markets such as China and India.
Sales to China rose 35.9 per cent in the second quarter and by 36.2 per cent to the Asia Pacific region.
Although Nokia admitted it had been helped by difficulties at Motorola, its US rival, chief executive Olli Pekka Kallasvuo insisted he was not resting on his laurels even though competition in the last quarter had been "relatively easy".
The possibility that strong new competitors could emerge quickly in the mobile phone industry was underlined yesterday by figures from IDC Worldwide, an industry research group.
It said Motorola had now been ousted as the world's number two supplier by Samsung, the South Korean company, with a 13.7 per cent market share in the second quarter compared with 13 per cent for the US company.
Nokia still dominates the market with a share of 37 per cent.
Motorola's decline has been driven by a lack of new products and huge margin erosion as it engaged in a price war with Nokia - a decision that has backfired and prompted a restructuring at the company.
Samsung has tapped into consumer demand with a series of popular and competitively priced products.
Nokia said net sales in the second quarter rose 28 per cent from €9.8 billion to €12.6 billion ($17.2 billion) while its operating margin rose from 15.3 per cent last year to 18.7 per cent. "Increasing market share and profitability are not mutually exclusive," said Mr Kallasvuo.
Net profit was €2.83 billion compared with €1.14 billion previously, skewed by a €1.88 billion one-off gain from the creation of Nokia Siemens Networks, its joint venture with Germany's Siemens.
"Nokia Siemens Networks had a challenging quarter.
"Both net sales and margins were weak and these adverse developments require decisive action," said Mr Kallasvuo. - (Financial Times service)
