Finn phone financial fuss as Nokia drops its Q4 outlook

By Angela Gunn | Published November 14, 2008, 3:55 PM

The mobile-phone scene is looking a little bleaker for this year's holiday season, as Nokia made an out-of-cycle adjustment on Friday to its expected fourth-quarter earnings, and issued some unpleasant industry-wide predictions.

The announcement dims overall expectations for the industry, since the company's previously positive outlook for the end of 2008 was one of the factors fueling what signs of hope were seen for the sector.

Nokia, citing economic conditions, tight credit, and currency volatility, now predicts that Q4 2008 sales volumes for the entire industry will be around 330 million "mobile devices," as it calls them. That's down from the Q4 2007 total of 336 million devices -- though up a bit from Q3 2008's 310 million.

But by "Q4" we are talking about the holiday season, and the holidays tend to be at least as important for mobile-phone companies as they are for any tech firm that isn't selling video games.

Nokia's fourth quarter history has been no exception, even though Nokia has for some time not been the brand with the season's "must-have" handset. (That may be the reason the company's not the powerhouse in the US market that it is elsewhere in the world.) In 2006, the company's fourth quarter was the first in Nokia history to see it sell over 100 million handsets -- 106 million, in fact. In Q4 2007, agreed by most observers to have been strong quarter for the industry overall, Nokia announced that it had achieved 40 percent of worldwide market share. Today's announcement states that Nokia expects to maintain or even slightly increase that market share in Q4.

View the full NOK chart at Wikinvest

For all of 2008, Nokia predicts industry sales of 1.24 billion devices, down from previous predictions of 1.26 billion. Looking forward, the company predicts that industry-wide mobile-device sales will be down in 2009, as will the mobile infrastructure and fixed infrastructure and related services market.

The company says it will address the declines in part by curtailing use of external contractors, consultants, and professional services, and by making further cuts in operating expenses. The company announced other layoffs and other restructuring moves ten days ago.

More details on cuts, estimates and economization are expected at the company's Capital Markets Day event on December 4. The next quarterly earning report (plus full-year results) is slated for January 22, 2009.

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