Nokia "It's tough out there"

(By Richard Holway 10.00pm 16th July 09) Nokia manufactures 4 out of every ten of the world’s mobile phones. And, lest you think that smartphones are all iPhones and Blackberries, Nokia is by far the world leader in smartphones too with a 41% market share.

Today, Nokia shares slumped by 10% as it announced a 66% dive in profits in Q2 and a 15% reduction YoY in the number of mobiles shipped. Contrary to previous expectations, Nokia now does not expect to increase its market share this year.

Nokia faces a triple whammy. In the mid-range, where it is all dominant, users are keeping their phones longer and opting for SIM only contracts. Sales in emerging markets have stalled (as Western economies have stopped buying their goods and services so that has affected demand at home) Then Apple and Blackberry have extremely strong competitive products in the high profit margin smartphone areas. Here, even Holway had a Nokia smartphone a year back before moving over to the much superior Blackberry Bold – along with many others it might seem.

Mind you, if Nokia’s results seem bad they were as nothing compared to Sony Ericsson which announced a 43% reduction YoY in units shipped in Q2 which resulted in its fourth consecutive quarterly loss. Sony Ericsson also blames stiff competition from Apple and RIM.

For nigh on 20 years, there was an upstoppable upward trajectory in mobile phone unit sales. Globally they are expected to slump 10% this year. Maybe mobile phone sales are a very good barometer of the global economy? If so, we see no green shoots!