World’s biggest mobile phone producer Nokia has made huge profit in their fourth quarter of 2006. The Finland based company beat analysts’ estimates by 19% by posting sales revenue of $1.65 billion. The good part of the story is that most of its profit came from emerging markets like China and India. I am quoting from the report published in Investors.com:
Fourth-quarter results from Finnish handset maker Nokia (NOK) show that the world's No. 1 seller of mobile phones is adjusting to heightened competition and finding ways to profitably increase its sales in high-growth developing markets.
"Emerging markets were again the driver of growth, with markets like China, southeast Asia-Pacific, India, the Middle East and Africa each seeing year-on-year growth of over 35% in the fourth quarter," Chief Executive Olli-Pekka Kallasvuo said in a conference call with analysts on Thursday, after Nokia released its results. "We expect this kind of trend will continue in '07."
Sales rose 13% vs. the year-ago quarter, to $15.45 billion. For the year, sales rose 20% to $54.3 billion.
Although Nokia’s average selling price fell down, by selling cheap mobile phones in large volumes, the company made huge profit. In order to make cheap sets, Nokia shifted some of their productions from America to India.
India’s potential as a market does not need to be illustrated. The huge rural population of the country has remained an untapped. Recently, The Center for Knowledge Societies (CKS), a research wing of Nokia, conducted a research in rural India which shows that mobile phone has created a huge impact in the social and economical sphere of rural India. Mobile phone has huge contribution in the business sector in rural areas.
From the condition, it looks like the South Asian countries and other developing countries would become the next target of mobile phone companies. Few days ago, China Mobile Corporation, the largest mobile company in the world has bought shares in Paktel, Pakistan’s fifth largest mobile phone service provider. Now, Nokia has made huge profits by selling cheap mobile phones. Who would be the next fortunate company?
Related articles: Wireless Developer Network
Investors.com
New York Times
Hello, Nokia is doing well. They are selling more phones than ever. Cost-effective production, a strong brand and global distribution is a key to Nokia's success. The US market is however a big challenge for Nokia. The Web 2.0 and other trend-setters are located in US and Nokia needs to improve in that market. It' s going to be a big challenge for the Nokia managament to get a hold of the trendy US market. iPod certainly has made an impact. We are going to see a design war i mobile phones. Price matters but design and street friendly functions are going to be even more important in some market segments.
Posted by: Helge V. Keitel | January 27, 2007 11:18 PM | Permalink to Comment