Nokia 2Q Net Profit Plunges by 28 Percent

Hit by the global recession and weakness in the dollar, mobile phone leader Nokia Corp. reported Thursday that its second-quarter net profit fell 28 percent and warned that sales in the current quarter could fall short of last year's level.

Blaming a lousy economy and a weak U.S. dollar, mobile phone giant Nokia Corp. reported that its second-quarter net profit fell 28 percent from last year.

The Espoo, Finland, company earned 624 million Euros ($693 million) in the quarter ending June 30, compared with 862 million Euros in the second quarter of 2002.

Net sales rose one percent from last year: 7.019 billion Euros ($7.8 billion) up from 6.935 billion Euros last year.

Mobile phone sales were up by only 2 percent in terms of dollars, but in terms of units shipped, the sales were up 14 percent.

"Key to our success has been, and will continue to be, our winning execution and strong competitive position in all major technologies and segments," said Nokia Chairman and CEO Jorma Ollila, in a statement. "For the full year 2003 we are looking to enhance our leadership with a record launch of more than 35 new models."

Nokia expects phone shipments to increase by 10 percent in the third quarter, but revenue is expected to be flat or slightly down, again because of dollar depreciation.

To woo business customers, Nokia is forming a group called Nokia Enterprise Solutions, which will marry various corporate efforts from the companys mobile phone and ventures businesses. Enterprise Solutions will begin financial reporting in 2004.

For the companys network equipment business, Ollila said that "Decisive restructuring efforts are now underway." By the end of 2003, Nokia Networks will have about 15,000 employees, compared with 17,361 at the end of 2002, he said.

Nokia expects a year-on-year sales decline of 15 to 20 percent for the third quarter for the network business.