Nokia first quarter earnings ‘better than expected’

Former mobile leader Nokia has reported its profits were better than anticipated for the first financial quarter of 2011, falling only one per cent to 304 million.

Nokia's original forecast for the first quarter predicted profit margins would fall from 9.8 per cent to as low as six per cent.

The revelation comes despite Nokia's market share declining to 29 per cent - a four per cent drop from last year - attributed to Nokia's difficulty in keeping up with market rivals such as Apple, HTC and Samsung.

Apple in particular has been a thorn in Nokia's side and both the iPhone and RIM's BlackBerry devices have caused much concern to shareholders. Earlier in the week, Apple announced a 95 per cent rise in profits and record sales of 18.65 million iPhones in the first quarter.

Nokia's numbers are quite revealing. It sold six times the number of devices as Apple, around 108.5 million Nokia phones, but the higher price band of the iPhone has generated higher revenue on a smaller number of units sold an estimated 7 billion to Nokia's 5.6 billion.

At the same time, Nokia announced it has finalised deals with Microsoft to replace the Symbian operating system with Windows Phone 7, news which in turn sent Nokia shares up 2.2 per cent. Nokia has also said the agreement will enable the company to cut costs by around 880 million a year.

Stephen Elop, chief executive (CEO) of Nokia, said: "In the first quarter, we shifted from defining our strategy to executing our strategy. On this front, I am pleased to report that we signed our definitive agreement with Microsoft and already our product design and engineering work is well under way."

"Following a solid first quarter, we expect a more challenging second quarter."

In Nokia's case, good luck seems to come in threes, with investors hearing news a 589 million acquisition of Motorola Siemens network assets has gained sufficient clearance and is now pegged for completion by 29 April.