Recession hits Nokia

Nokia reports 90% drop in net profits for first quarter 2009

Just a couple weeks ago, Nokia was glowing.  It was showing off all sorts of gadgets and new features in its vibrant booth at the Web 2.0 expo in San Francisco, Ca. 

Today, things look a little more grim as the world’s largest maker of cellphones released its 2009 first-quarter reports.

Nokia’s net profits fell 90% in the first quarter of this year, earning only 122 million euros in comparison to last year, in which the company earned 1.22 billion euros.

Nokia is blaming this massive decline on the global recession.  Nokia CEO, Olli-Pekka Kallasvuo explained in a statement, "the inventory already in the sales channels decreased substantially during Q1 due to extensive destocking by operators and distributors."

Although Nokia’s profits are dropping significantly, it is in the middle of rolling out a plethora of new products including Smartphones, which are actually launching a little late in the game, and its Ovi app store, set to launch in May of this year – note this is almost 10 months after the launch of the Apple App Store – a little late once again.

Amid the disappointing news, Nokia is optimistic about its new 5800 XpressMusic device, in which the company says it shipped 2.6 million units during the first quarter of 2009.  Probably because the device is touchscreen and up to par with what is being accepted as a standard in smartphones.

Nokia expects most of this decline will end by the second half of 2009.

Let’s see how Nokia holds up against upcoming competitors like Apple, Blackberry and Palm who are expected to release new devices very soon.