Source AP ©

Nokia: net profit dropped nearly 7 percent

Nokia Corp, the World’s largest mobile phone maker, said Thursday that its first-quarter profit dropped nearly 7 percent for high sales of low-end models in emerging markets decreased the average selling price.

Net profit came to EUR979 million (US$1.33 billion), down from EUR1.05 billion in the first three months of 2006, Nokia said, adding that its share of the global mobile phone was up slightly at 36 percent.

Overall sales grew to EUR9.9 billion (US$13.4 billion) from EUR9.5 billion in the year-ago period, Nokia said.

The average selling price of Nokia's handsets was EUR89 (US$120), unchanged from the previous quarter, but down 14 percent from EUR103 in first quarter of 2006 due to a higher proportion of low-end handsets sold in emerging markets including India and China.

Worldwide, 253 million mobile devices were sold in the period, an increase of 18 percent, Nokia said.

Shares in Nokia jumped more than 3 percent in Helsinki to EUR18.15 (US$24.64).

"The company's margins in both mobile phones and overall remained good, and it did better than expected in the multimedia section," said Raine Vammelvirta from FIM Securities.

Net sales in Nokia's multimedia division grew 28 percent to EUR2.2 billion (US$3 billion).

Chief Executive Olli-Pekka Kallasvuo said he was encouraged by the results.

"Our profitability was strong, with both gross and operating margins up sequentially, excluding special items," Kallasvuo said. "We also saw good year-on-year device volume growth that led to an increase in our market share, further solidifying our No. 1 position in the industry."

Nokia booked restructuring charges of EUR69 million (US$94 million) in the quarter, compared with EUR22 million in the same period last year.

The company, based in Espoo, has operations in 130 countries and employs 68,000 people.

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