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Electronics Production | February 17, 2010

Nokia stays on top on profitability in 2009

Defying rising competitive pressures in the smart-phone segment, Finnish mobile phone giant Nokia managed to achieve industry-leading profitability in 2009, reports market researcher iSuppli.
Nokia reported for 2009 an operating profit of 12.3%; this compares to an average of 0.7% for all the Top5 mobile phone makers - Samsung being a close second with a reported operating profit of 10.5%.

“Facing severe competition from slick rivals including the iPhone and Google Android-based models, Nokia’s leadership position in the global smart-phone market began to erode starting in the 2Q/08,” said Tina Teng, senior wireless communications analyst at iSuppli. “By the 3Q/09, Nokia’s share of shipments had declined to 34.5%, down from a recent high of 44.2% in the 1Q/08. However, by the 4Q/09, Nokia’s share of smart phone shipments recovered to nearly 40%, at 39.5%.”

However, Nokia was not unaffected by downturn and its operating profit was down from 17% in 2008. In 2009, Nokia sold 431.8 million mobile handsets – down 7.8% from 468.4 million in 2008. (The overall handset market declined by 6.7%.) The mobile phone giant however, was still able to maintain its dominant position with a 37.8% share of unit shipments, nearly double that of the second-largest player, Samsung, the market researcher iSuppli.

The attached table presents iSuppli's ranking of the world’s Top-5 mobile handset brands in order of unit shipments.



South Korean manufacturer Samsung was able to outperform its competitors in 2009; being the only company among the Top5 brands to increase both its market share and operating profits. iSuppli expects that Samsung will further improve its profit margins in 2010 as it continues to source more key components from its internal semiconductor business unit.

No.-3 LG Electronics – also from South Korea – was able to gain a 2.1 percentage points of market share. It also was the top performer among the Top5 in terms of shipment growth (a 17% growth compared to 2008). Despite all that, the company still had to suffer a 4.2 percentage point decline in operating profit.

Sony Ericsson – the number 4 in iSuppli’s Top list – was able to maintain its market share of around 5% in 2009, despite the operational losses it suffered throughout the year. The company started in mid-2008 to reduce its workforce and introduced cost cutting measures. This has resulted in a 21% decline in operating expenses, equal to a $772 million saving, the market researcher notes. However, Sony Ericsson has also suffered a 40% drop in revenue (compared to a 10.4% for the entire industry).

Motorola had to report operating losses since 2007, but managed a slight improvement in the second half of 2009, iSuppli states. Motorola has announced several high-end devices outside of the United States, especially in China – which is aimed at regaining market share as well as to strengthen its position in higher-profit margins, iSuppli believes.
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Source: iSuppli

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