Nokia Corporation
Stock exchange release
December 4, 2008 at 13.00 (CET +1)
Nokia Capital Markets Day 2008
Nokia lowers the mobile device industry outlook for Q4 2008 and gives outlook
for 2009
New York, NY, USA - Today, at its annual Capital Markets Day event,
Nokia lowered its forecast for mobile device industry volumes for the fourth
quarter 2008. Nokia also presented forecasts for the company and the industry
for 2009. At the event, senior company executives outlined how Nokia's strategy,
robust financial structure and competitive product portfolio are expected to
ensure the company remains in a position of strength in the more challenging
economic times ahead.
Nokia President and CEO, Olli-Pekka Kallasvuo, highlighted the benefits of
Nokia's brand, scale and number one market position, stating: “2009 will be
challenging for our industry, however we have a strong, enviable base to build
on and I believe we will continue to strengthen our position on many fronts.
Building on our operational flexibility, Nokia is acting to reduce costs
appropriately in the current slowing environment. At the same time, we remain
fully committed to making the investments to build the future of our exciting
industry and Nokia's continued competitiveness.”
Nokia CFO, Rick Simonson, emphasized that appropriate cost reductions are being
effected now and are continuing in plans for 2009 and 2010: “Nokia's highly
variable, low fixed cost business model allows us to scale to a declining
market. We are also acting on all fronts to reduce our costs beyond what may be
attributable solely to the scalable aspects of the business model - moving to
reduce cost of goods sold even further, reduce operational expenditure
appropriately, and scale back capital expenditure. We expect these strong
actions to offset, in part, the negative impact of slowing sales.”
Outlook for Nokia and the mobile device industry - fourth quarter 2008
The mobile device market slowdown has continued more rapidly than previously
expected since Nokia issued an update on November 14, 2008. The industry
continues to be impacted by the effects of a global consumer pull-back in
spending, currency volatility, and decreased availability of credit. Nokia
believes the slowdown is apparent in varying degrees across all markets, while
the most recent incremental impact in the emerging markets has been more
pronounced than in other markets. As a result, and while noting the lack of
visibility due to the factors cited above, Nokia is revising its fourth quarter
2008 outlook as follows:
- Nokia now estimates that fourth quarter 2008 industry mobile device volumes
will be lower than the previous estimate of approximately 330 million units,
which would result in full year 2008 industry mobile device volumes below the
earlier estimate of 1.24 billion units.
- Nokia believes there is insufficient visibility in the marketplace to confirm
its prior estimate for its fourth quarter 2008 mobile device market share, which
was expected to be at the same level or slightly up from an estimated 38% in the
third quarter 2008.
Outlook for Nokia Siemens Networks and the mobile infrastructure, fixed
infrastructure and related services market - 2008
- Nokia and Nokia Siemens Networks continue to expect the mobile infrastructure,
fixed infrastructure and related services market to be flat in euro terms in
2008, compared to 2007.
- Nokia and Nokia Siemens Networks continued cost synergy target for Nokia
Siemens Networks is to achieve substantially all of the EUR 2.0 billion of
targeted annual cost synergies by the end of 2008.
Targets and forecasts for Nokia and the mobile device industry - 2009 and going
forward
- Nokia expects that the mobile device market will continue to be negatively
impacted by the effects of a slowdown in consumer spending. Nokia also expects
that operator and retail distribution channels will go through a period of
destocking, resulting in lower sales volumes by manufacturers (sell-in) than
purchase volumes by consumers (sell-through) for the industry in the first half
of 2009.
- While noting the extremely limited visibility, Nokia expects 2009 industry
mobile device volumes to decline 5% or more from 2008 levels.
- Nokia expects the four billion mobile subscriptions mark to be reached in the
first quarter 2009.
- Nokia targets an increase in its market share in mobile devices in 2009
compared to 2008, including increased share in smartphones.
- As previously announced, Nokia has adjusted its Internet services market focus
to the areas of music, maps, media, messaging and gaming. Nokia estimates these
targeted portions of the Internet services market will be approximately EUR 40
billion in 2011. In December 2007, Nokia estimated that the total Internet
services market would be approximately EUR 100 billion in 2010.
- Nokia targets Services & Software net sales of EUR 2 billion or more in 2011.
- Nokia targets its Services & Software business to have 300 million unique
services users by 2012.
Targets and forecasts for Nokia Siemens Networks and the mobile infrastructure,
fixed infrastructure and related services market - 2009
- Nokia and Nokia Siemens Networks preliminary estimate is that the mobile
infrastructure, fixed infrastructure and related services market will decline 5%
or more in euro terms in 2009, from 2008 levels.
- Nokia and Nokia Siemens Networks target for Nokia Siemens Networks market
share to remain constant in 2009, compared to 2008.
Nokia financial targets (non-IFRS*) - 2009
Given the unprecedented environment, Nokia will not, at this time, be giving
operating margin targets for beyond 2009.
- Nokia Devices & Services operating margin target to be in the teens in 2009.
- NAVTEQ operating margin targeted to be somewhat above the Devices & Services
operating margin in 2009.
- Nokia Siemens Networks operating margin target to be in the single digits in
2009.
Nokia priorities for 2009
In addition to updating its financial targets, Nokia also outlined key
priorities for 2009. These are:
- To ensure that Nokia's cost base is appropriately sized for a more challenging
environment;
- To grow mobile device market share, to capture growth opportunities in NAVTEQ
and device enhancements, and to capture value from adjacent markets;
- To build on the momentum in Services & Software by continuing to grow and
focus its services portfolio;
- To mobilize consumer email and consumer instant messaging for millions of
Nokia device users, and;
- To further integrate and simplify Nokia's web services user interface and
device user interface.
* Non-IFRS results exclude special items for all periods. In addition, non-IFRS
results exclude intangible asset amortization, other purchase price accounting
related items and inventory value adjustments arising from the formation of
Nokia Siemens Networks and from all business acquisitions completed after June
30, 2008. For the preceding periods, non-IFRS results exclude such items and
adjustments arising from the formation of Nokia Siemens Networks only. Nokia
believes that these non-IFRS financial measures provide meaningful supplemental
information to both management and investors regarding Nokia's performance by
excluding the above-described items that may not be indicative of Nokia's
business operating results. These non-IFRS financial measures should not be
viewed in isolation or as substitutes to the equivalent IFRS measure(s), but
should be used in conjunction with the most directly comparable IFRS measure(s)
in the reported results.
The main presentations at Nokia Capital Markets Day will be webcast live at:
http://investors.nokia.com
The breakout presentations at Nokia Capital Markets Day will be webcast
(archived) at: http://investors.nokia.com
FORWARD-LOOKING STATEMENTS
It should be noted that certain statements herein which are not historical
facts, including, without limitation, those regarding: A) the timing of product,
services and solution deliveries; B) our ability to develop, implement and
commercialize new products, services, solutions and technologies; C)
expectations regarding market growth, developments and structural changes; D)
expectations regarding our mobile device volume growth, market share, prices and
margins; E) expectations and targets for our results of operations; F) the
outcome of pending and threatened litigation; G) expectations regarding the
successful completion of contemplated acquisitions on a timely basis and our
ability to achieve the set targets upon the completion of such acquisitions; and
H) statements preceded by "believe," "expect," "anticipate," "foresee,"
"target," "estimate," "designed," "plans," "will" or similar expressions are
forward-looking statements. These statements are based on management's best
assumptions and beliefs in light of the information currently available to it.
Because they involve risks and uncertainties, actual results may differ
materially from the results that we currently expect. Factors that could cause
these differences include, but are not limited to: 1) the deteriorating global
economic conditions and related financial crisis and their impacts on us, our
customers, suppliers, and collaborative partners; 2) competitiveness of our
product, service and solutions portfolio; 3) the extent of the growth of the
mobile communications industry; 4) the growth and profitability of the new
market segments that we target and our ability to successfully develop or
acquire and market products, services and solutions in those segments; 5) our
ability to successfully manage costs; 6) the intensity of competition in the
mobile communications industry and our ability to maintain or improve our market
position or respond successfully to changes in the competitive landscape; 7) the
impact of changes in technology and our ability to develop or otherwise acquire
complex technologies as required by the market, with full rights needed to use;
8) timely and successful commercialization of complex technologies as new
advanced products, services and solutions; 9) our ability to protect the complex
technologies, which we or others develop or that we license, from claims that we
have infringed third parties' intellectual property rights, as well as our
unrestricted use on commercially acceptable terms of certain technologies in our
products, services and solution offerings; 10) our ability to protect numerous
Nokia and Nokia Siemens Networks patented, standardized or proprietary
technologies from third-party infringement or actions to invalidate the
intellectual property rights of these technologies; 11) Nokia Siemens Networks'
ability to achieve the expected benefits and synergies from its formation to the
extent and within the time period anticipated and to successfully integrate its
operations, personnel and supporting activities; 12) whether, as a result of
investigations into alleged violations of law by some current or former
employees of Siemens AG ("Siemens"), government authorities or others take
further actions against Siemens and/or its employees that may involve and affect
the carrier-related assets and employees transferred by Siemens to Nokia Siemens
Networks, or there may be undetected additional violations that may have
occurred prior to the transfer, or ongoing violations that may have occurred
after the transfer, of such assets and employees that could result in additional
actions by government authorities; 13) any impairment of Nokia Siemens Networks
customer relationships resulting from the ongoing government investigations
involving the Siemens carrier-related operations transferred to Nokia Siemens
Networks; 14) occurrence of any actual or even alleged defects or other quality
issues in our products, services and solutions; 15) our ability to manage
efficiently our manufacturing and logistics, as well as to ensure the quality,
safety, security and timely delivery of our products, services and solutions;
16) inventory management risks resulting from shifts in market demand; 17) our
ability to source sufficient amounts of fully functional components and
sub-assemblies without interruption and at acceptable prices; 18) any disruption
to information technology systems and networks that our operations rely on; 19)
developments under large, multi-year contracts or in relation to major
customers; 20) economic or political turmoil in emerging market countries where
we do business; 21) our success in collaboration arrangements relating to
development of technologies or new products, services and solutions; 22) the
success, financial condition and performance of our collaboration partners,
suppliers and customers; 23) exchange rate fluctuations, including, in
particular, fluctuations between the euro, which is our reporting currency, and
the US dollar, the Chinese yuan, the UK pound sterling and the Japanese yen, as
well as certain other currencies; 24) the management of our customer financing
exposure; 25) allegations of possible health risks from electromagnetic fields
generated by base stations and mobile devices and lawsuits related to them,
regardless of merit; 26) unfavorable outcome of litigations; 27) our ability to
recruit, retain and develop appropriately skilled employees; 28) the impact of
changes in government policies, laws or regulations; and 29) our ability to
effectively and smoothly implement our new organizational structure; as well as
the risk factors specified on pages 10-25 of Nokia's annual report on Form 20-F
for the year ended December 31, 2007 under "Item 3.D Risk Factors." Other
unknown or unpredictable factors or underlying assumptions subsequently proving
to be incorrect could cause actual results to differ materially from those in
the forward-looking statements. Nokia does not undertake any obligation to
update publicly or revise forward-looking statements, whether as a result of new
information, future events or otherwise, except to the extent legally required.
Media and Investor Contacts:
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Investor Relations Europe, tel. +358 7180 34289
Investor Relations US, tel. +1 914 368 0555
www.nokia.com