Mobile phone maker Nokia reported second-quarter profit just below market expectations today as rising shipments failed to offset the effect of fierce price competition from rivals.
Its shares dropped sharply on the news, down 7.5 per cent to €13.60. It posted a 34 per cent rise in shipments of mobile phones but saw the average selling price (ASP) drop to €105 from €110 in the previous quarter.
"As (the) growth came primarily from emerging markets, where low-end products predominate and pricing pressures are currently intense, industry average selling prices continued to edge downwards," chief executive Jorma Ollila said in the report.
The Finnish firm posted earnings per share of €0.18, up from €0.15 a year ago, and saw sales rise 25 per cent to €8.1 billion ($9.78 billion).
Nokia predicted its third-quarter earnings per share would be between €0.14 and €0.17 versus €0.15 a year ago, on sales between €7.9 billion and €8.2 billion.
Analysts in the poll have given an average third-quarter estimate of €0.20, with sales rising to €8 billion. The mobile phone market had a brisk April-June, with shipments at Nokia's closest rival Motorola up 40.6 per cent year-on-year.
Research group Gartner forecasts 16 per cent growth in global handset unit shipments in 2005. Nokia also raised its forecast for global mobile industry sales to 760 million units in light of the stronger-than-expected quarterly development.
It said its market share was 33 per cent in the quarter, up from 32 per cent in the first quarter, due to a strong performance in the Americas and China. The firm's operating margin slipped to 12.5 per cent in April-June from 13.7 a year ago, hit by price competition with smaller rivals such as LG Electronics and Samsung Electronics.