Nokia (NOK) Pops Amid Weak Q2 Results as Investors Cheer Growth Plans

July 21, 2011 7:38 AM EDT
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Nokia (NYSE: NOK) shares are trading higher early Thursday, amid second-quarter metrics that would suggest otherwise.

Overall, revenues fell by about 7 percent to €9.275 billion, from €10.003 billion in the same period last year. NAVTEQ saw a 3 percent decline in sales to €245 million, and Nokia Siemens sales increased 20 percent to €3.642 billion.

Operating income, as adjusted, fell 41 percent to €391 million, or €0.06 per share.

Mobile device volume in the quarter declined 20 percent, from 111 million units to 88.5 million units. Average selling price increased about 1.6 percent to €62 per unit. The biggest decline was felt in China, volume dropping 41 percent to 11.3 million. Latin America was the only segment reporting growth, about 10 percent to 12.3 million units. No constraints in the second-quarter were realized due to the earthquake in Japan.

Commenting: "At the end of the first quarter 2011, our sales channel inventories were slightly above normal levels given then anticipated volumes. During the second quarter 2011, distributors and operators purchased fewer of our devices across our portfolio as they reduced their inventories of Nokia devices."

Nokia is accelerating its plans to reduce its Devices & Services non-IFRS operating expenses and now targets to exceed its previous Devices & Services non-IFRS operating expense reduction target of €1 billion for the full year 2013, compared to the full year 2010 Devices & Services non-IFRS operating expenses of €5.65 billion. From the release: "Nokia's cost reduction activities include a strategic collaboration with Accenture (NYSE: ACN) to outsource Nokia's Symbian software development and support activities to Accenture. Approximately 2 800 Nokia employees are expected to transfer to Accenture at closing, which is expected to take place in the early part of October 2011. In addition, we also announced plans to reduce our global workforce by about 4,000 employees by the end of 2012, as well as plans to consolidate the company's research and product development sites so that each site has a clear role and mission."

Nokia shares are up about 3.3 percent pre-market.

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