Nokia Market Share Hits 40%

Nokia's surge comes at the expense of Motorola, which saw its struggles continue in the fourth quarter.

Where did Motorola's mobile handset market share go? Try Nokia, which announced Jan. 24 that it grabbed 40 percent of global cell phone sales in the fourth quarter.

That was just the start of the good news for Finland-based Nokia. Profit at the world's No. 1 handset maker soared 44 percent to $2.6 billion and net sales for the quarter jumped 34 percent to $22.9 billion on sales of 133 million handsets, up 27 percent from the fourth quarter of 2006.

"Nokia's excellent fourth quarter contributed to a year of high growth and increased profitability for the company, while our industry-leading product portfolio drove our device business to an estimated 40 percent market share in the fourth quarter," CEO Olli-Pekka Kallasvuo said at a teleconference. "At the same time, we again increased our quarterly device margins, allowing Nokia to continue to invest for innovation and growth."

Kallasvuo said Nokia "is well positioned for growth in 2008. I feel quite good about Nokia's fundamentals across the globe."

Click here to read about how Nokia is looking to Internet services for growth.

That was certainly more than new Motorola CEO Greg Brown could claim at the company's Jan. 23 earnings conference. Brown reported that the nation's No. 3 cell phone maker shipped 40.9 million handset units in the fourth quarter, a dramatic drop from the 65.7 million units shipped a year earlier. Motorola's Mobile Devices segment sales were $4.8 billion, down 38 percent compared with the year-ago quarter.

"We recognize there is a lot more work to be done," Brown said. "Demand for some of our products has slowed in an increasingly competitive market."

A JP Morgan investment note issued Jan. 23 said Motorola's sharp decline in handset sales was likely due to Nokia's gains.

"It is ... entirely possible that Nokia has taken share from other vendors," the JPMorgan research note stated. "The aggregate unit shortfalls of Sony Ericsson, Samsung and Motorola only add up to 0.6 percent of our 355.3 million unit Q4 market forecast. Nokia alone could absorb this and there are other vendors with momentum like LG that could also have taken share."

Both Kallasvuo and Nokia Chief Financial Officer Rick Simonson dismissed the slowing U.S. economy as a cause of concern for global handset sales.

"We are currently seeing a healthy market and good demand for Nokia products," Simonson said. "The United States is less than 5 percent of our revenue. Our current exposure to the U.S. economy is low."

Kallasvuo agreed.

"The big bulk of the population [doesn't] know what the [U.S. Federal Reserve] is or have not heard about [Federal Reserve Chairman Ben] Bernanke, but they have to buy mobile phones," he said. "It's a necessity item for them. More and more people cannot be without a mobile phone."