Nokia rides smartphone gains in fourth quarter

The company is battling back in the smartphone sector, but fourth-quarter sales overall were still down even as profits rose on cost cuts.

Marguerite Reardon Former senior reporter
Marguerite Reardon started as a CNET News reporter in 2004, covering cellphone services, broadband, citywide Wi-Fi, the Net neutrality debate and the consolidation of the phone companies.
Marguerite Reardon
2 min read

Nokia, the biggest mobile phone maker in the world, could be making a comeback in the smartphone market. The company reported Thursday that it gained worldwide marketshare in this sector during the fourth quarter of 2009.

The company, based in Finland, said Thursday that during the quarter it saw a 60 percent increase in profits, mostly due to cost-cutting and layoffs. For the fourth quarter, Nokia said profits rose to 882 million euros, or $626 million, compared with 551 euros for the year-ago period.

Nokia N97
Can the N97 help keep Nokia in fighting trim in the smartphone arena? Nokia

Sales at the company dipped about 5 percent to 11.99 billion euros from 12.7 billion euros during the same quarter a year earlier.

Still, even though revenue was down, Nokia executives noted that the company gained market share in the smartphone category. Nokia now has 40 percent market share in smartphones, up from 35 percent as of September. And the company's overall mobile handset market share increased to 39 percent from 38 percent in September.

Even though Nokia has always maintained its worldwide dominance in the smartphone market, it has faced stiff competition from competitors such as Research in Motion with its BlackBerry devices, and Apple with the iPhone.

Over the past year, the company had lost market share to these companies. But now it looks like Nokia could be making a turnaround in smartphones, mostly due to strong performance in China, Asia, Africa and the Middle East. Strong growth in these regions helped offset sales declines in North America, South America, and Europe.

Nokia said it sold 52.4 million smartphones during the fourth quarter, up from 47 million a year earlier. In total, Nokia said it sold 126.9 million handsets in the fourth quarter, 12 percent more than a year earlier.

"Our performance in smartphones, combined with continuing success in the emerging markets, helped us increase sales in our devices and services unit, both quarter-on-quarter and year-on-year," Olli-Pekka Kallasvuo, Nokia's CEO, said in a statement.

The company's profits came amid steep cuts. Nokia cut its R&D spending by about 9 percent to roughly 1.6 billion euros. Its sales and marketing was slashed by 18 percent to 1.05 billion euros. And the company cut its general administrative expenses by about 15 percent to about 294 million Euros compared to the year before.

Layoffs continued, with Nokia eliminating 2,276 jobs, or 1.8 percent of its workforce, during 2009.

Meanwhile, Nokia's services business grew 15 percent from the previous quarter to 169 million euros. The company also saw growth in its Navteq navigation and maps service as automakers bought the technology for in-car navigation devices.

Nokia also said Ovi, its online store that sells applications for its handsets, is now getting more than 1 million downloads per day.