Helsinki - Nokia's quarterly profit fell for the first time in more than a year on charges to close a factory in Germany and gains from its network venture a year earlier, the biggest maker of cellphones said yesterday.
Nokia rose as much as 6.8 percent in Helsinki trading after reporting second-quarter sales of €13.2 billion (R160.3 billion), exceeding analysts' estimates of €12.8 billion.
Net income fell 61 percent to €1.1 billion from €2.83 billion a year earlier, the company said.
Slowing consumer spending in the US and Europe hurt phone sales, while the dollar's decline reduced prices.
Chief executive Olli-Pekka Kallasvuo warned in April that the value of the handset market would shrink in euro terms this year.
Nokia aims to increase its market share, which is close to 40 percent, by introducing touch-screen phones this year, catching up with Samsung Electronics and Apple.
Richard Windsor, an analyst at Nomura International in London, said: "Nokia needs to launch compelling products in fairly short order to halt this insurgency in its tracks."
"Smartphones are an issue," he added.
Before yesterday, shares in Nokia had dropped 41 percent this year, cutting its market value to €61.8 billion, on concern slowing economies would crimp demand. That compares with a 29 percent decline in the 22-company Dow Jones Europe Stoxx Technology index.
Kallasvuo increased Nokia's market share last year by introducing handsets costing less than $50 (R382.45) and pricier models with satellite navigation, at the expense of rivals including Motorola.
Nokia gets more than half of its revenue from outside Europe and North America, while China and India are its two biggest markets. About half of Nokia's sales are in dollars or linked currencies. The US currency fell about 15 percent against the euro in the 12 months to June.
The average selling price of Nokia's phones fell to €79 in the first quarter from €83 in the previous quarter on increased sales in emerging markets.
Gartner, a Connecticut-based research firm, cut its 2008 forecast for global phone sales last Monday, citing higher living costs in emerging markets. Gartner now forecasts the market will grow 10 percent to 11 percent this year, down from a previous prediction of as much as 15 percent growth.
Nokia closed a factory in Germany last month to cut costs. The company agreed with unions on a €200 million package to support the 2 300 German workers who were facing unemployment.
This month, Credit Suisse analyst Gulbinder Garcha cut his recommendation on Nokia to neutral from outperform, saying the company would not be able to keep its market share in advanced phones at close to 50 percent.