It is difficult to sustain the market leadership position in the current financial meltdown scenario and Finnish handset major, Nokia realized it the hard way as it witnessed a 90 percent y-o-y decline in net profit for Q1. Revenues too slipped 26.7 percent.

For Q1, the profits reached euro 122 million as compared to euro 1.2 billion recorded in the corresponding quarter last year. Revenues reached euro 9.3 billion from euro 12.7 billion.

The company’s main business divisions i.e. Devices and Services and Nokia Siemens Networks recorded drop in revenues of 33.4% and 12.1 % respectively. Revenues for Devices and Services business division stood at euro 6.173 billion as compared to euro 9.263 billion witnessed a year ago. Revenues for NSN reached euro 2.9 billion when compared to euro 3.4 billion registered a year ago. Revenues from new business stream NAVTEQ totaled euro 32 million.

Operating profit-wise, Devices and Services disappointed with profits of euro 547 million as compared to euro 1.883 billion in Q1 2008. This drop amounted to 71.0 percent. NSN too slide further int0 loss of euro 384 million as compared to euro 74 million recorded in Q1 2008.  

EPS resulted in mere 0.03 as compared to 0.32 in Q1 2008.

In terms of unit sales, the company managed 93.2 million unit shipments, a decline of 19.3% on a y-o-y basis. Except for North America all the regions including Asia-Pacific recorded decline.  Market share too declined to 37% as compared to 39% in Q1 2008.

Device average selling price (ASP) reached euro 65 as compared to euro 71 last year during the corresponding quarter.

NSN too witnessed decline in sales except in Greater China.

Operating cash flow of the company is euro 276 million. The company now has Total cash and other liquid assets of euro 8.1 billion at the end of Q1 2009

For the next quarter the company expects the device sales to be near about the same level as Q1. It expects its market share to increase sequentially in Q2.

Shares of the company rose 95 cents to close at 11.08 euros in Helsinki, after gaining as much as 13 percent.

Company CEO Olli-Pekka Kallasvuo said, "In what has been an exceptionally tough environment, we continue to invest in a focused manner in consumer Internet services delivered across our broad portfolio of mobile devices. Combined, these solutions will drive our future growth. As an example in Q1, I am especially pleased with the performance of our first mass market touch product, the Nokia 5800 XpressMusic. Together with Comes With Music, it is a great example of Nokia providing solutions that consumers value.

Regarding the health of the overall mobile device market, the inventory already in the sales channels decreased substantially during Q1 due to extensive destocking by operators and distributors. This adversely impacted our sales volumes in the quarter. However, it has also resulted in the demand picture becoming more predictable as we enter the second quarter,” he added.