Nokia Q2 2010 net sales EUR 10.0 billion

Nokia operating cash flow of EUR 944 million

Nokia Corporation
Interim Report
July 22, 2010 at 13.00 (CET +1)

  Non-IFRS second quarter 2010 results1,2 EUR million Q2/2010 Q2/2009 YoY Change Q1/2010 QoQ
Change 
Net sales 10 005 9 913 1% 9 522 5%   Devices & Services 6 800 6 586 3% 6 663 2%   NAVTEQ 253 148 71% 189 34%   Nokia Siemens Networks 3 039 3 199 -5% 2 718 12%             Operating profit 660 775 -15% 820 -20%   Devices & Services 647 802 -19% 804 -20%   NAVTEQ 50 19 163% 41 22%   Nokia Siemens Networks 51 2   15               Operating margin 6.6% 7.8%   8.6%     Devices & Services 9.5% 12.2%   12.1%     NAVTEQ 19.8% 12.8%   21.7%     Nokia Siemens Networks 1.7% 0.1%   0.6%               EPS, EUR Diluted 0.11 0.15 -27% 0.14 -21%   Reported second quarter 2010 results2 EUR million Q2/2010 Q2/2009 YoY Change Q1/2010 QoQ Change Net sales 10 003 9 912 1% 9 522 5%   Devices & Services 6 799 6 586 3% 6 663 2%   NAVTEQ 252 147 71% 189 33%   Nokia Siemens Networks 3 039 3 199 -5% 2 718 12%             Operating profit 295 427 -31% 488 -40%   Devices & Services 643 763 -16% 831 -23%   NAVTEQ -81 -100   -77     Nokia Siemens Networks -179 -188   -226               Operating margin 2.9% 4.3%   5.1%     Devices & Services 9.5% 11.6%   12.5%     NAVTEQ -32.1% -68.0%   -40.7%     Nokia Siemens Networks -5.9% -5.9%   -8.3%               EPS, EUR Diluted 0.06 0.10 -40% 0.09 -33%

Note 1 relating to non-IFRS results: 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 i) the formation of Nokia Siemens Networks and ii) all business acquisitions completed after June 30, 2008. More specific information about the exclusions from the non-IFRS results may be found in this press release on pages 2-3, 14-16 and 18.

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. A reconciliation of the non-IFRS results to our reported results for Q2 2010 and Q2 2009 can be found in the tables on pages 11-12 and 14-18 of this press release. A reconciliation of our Q1 2010 non-IFRS results can be found on pages 10 and 12-16 of our Q1 2010 Interim Report of April 22, 2010.

Note 2: Nokia reported net sales were EUR 19 525 million and earnings per share (diluted) were EUR 0.16 for the period from January 1 to June 30, 2010. Further information about the results for the period from January 1 to June 30, 2010 can be found in this press release on pages 9-10, 12, 19-21 and 22.

SECOND QUARTER 2010 HIGHLIGHTS
– Nokia net sales of EUR 10.0 billion, up 1% year-on-year and 5% sequentially (down 4% and up 2% at constant currency).
– Devices & Services net sales of EUR 6.8 billion, up 3% year-on-year and 2% sequentially (down 2% and 1% at constant currency).
– Services net sales of EUR 158 million, up 7% sequentially; billings of EUR 295 million, up 29% sequentially.
– Nokia total mobile device volumes of 111.1 million units, up 8% year-on-year and 3% sequentially.
– Nokia converged mobile device (smartphone and mobile computer) volumes of 24.0 million units, up 42% year-on-year and 12% sequentially.
– Nokia mobile device ASP (including services revenue) of EUR 61, down from EUR 62 in Q1 2010.
– Devices & Services gross margin of 30.2%, down from 34.0% in Q2 2009 and 32.4% in Q1 2010.
– Devices & Services non-IFRS operating margin of 9.5%, down from 12.2% in Q2 2009 and 12.1% in Q1 2010.
– NAVTEQ non-IFRS net sales of EUR 253 million, up 71% year-on-year and 34% sequentially (up 69% and 30% at constant currency).
– Nokia Siemens Networks net sales of EUR 3.0 billion, down 5% year-on-year and up 12% sequentially (down 11% and up 10% at constant currency).

– Nokia Siemens Networks non-IFRS operating margin of 1.7%, up from 0.1% in Q2 2009 and 0.6% in Q1 2010.
– Nokia operating cash flow of EUR 944 million.
– Total cash and other liquid assets of EUR 9.5 billion at the end of Q2 2010.
– Nokia taxes were unfavorably impacted by Nokia Siemens Networks taxes as no tax benefits are recognized for certain Nokia Siemens Networks deferred tax items. If Nokia’s estimated long-term tax rate of 26% had been applied, non-IFRS Nokia EPS would have been approximately half a Euro cent higher.

OLLI-PEKKA KALLASVUO, NOKIA CEO:

“Despite facing continuing competitive challenges, we ended the second quarter with several reasons to be optimistic about our future. For one, the global handset market has continued to grow at a healthy pace, led by some of the less mature markets where Nokia is strong. We are also encouraged by the solid second quarter performance of our Mobile Phones business, helped by an improving line-up of affordable models.

In smartphones, we continue to renew our portfolio. We believe that the Nokia N8, the first of our Symbian^3 devices, will have a user experience superior to that of any smartphone Nokia has created. The Nokia N8 will be followed soon thereafter by further Symbian^3 smartphones that we are confident will give the platform broader appeal and reach, and kick-start Nokia’s fightback at the higher end of the market.”

INDUSTRY AND NOKIA OUTLOOK
– Nokia expects Devices & Services net sales to be between EUR 6.7 billion and EUR 7.2 billion in the third quarter 2010.
– Nokia expects its non-IFRS operating margin in Devices & Services to be between 7% to 10% in the third quarter 2010.
– Nokia and Nokia Siemens Networks expect Nokia Siemens Networks’ net sales to be between EUR 2.7 billion and EUR 3.1 billion in the third quarter 2010.
– Nokia and Nokia Siemens Networks expect the non-IFRS operating margin in Nokia Siemens Networks to be between -2% and 2% in the third quarter 2010.
– Nokia continues to expect industry mobile device volumes to be up approximately 10% in 2010, compared to 2009 (based on its revised definition of the industry mobile device market applicable beginning in 2010).
– Nokia continues to target its mobile device volume market share to be flat in 2010, compared to 2009.

– Nokia continues to expect its mobile device value market share to be slightly lower in 2010, compared to 2009.
– Nokia continues to target non-IFRS operating expenses in Devices & Services of approximately EUR 5.7 billion in 2010.
– Nokia targets Devices & Services non-IFRS operating margin of 10% to 11% in 2010. This provides quantification in line with the June 16, 2010, revised target for Devices & Services non-IFRS operating margin for 2010 to be at the lower end of, or below, the previous target of 11% to 13%. Nokia continues to expect Devices & Services non-IFRS operating margin during the fourth quarter 2010 to be higher than the currently targeted full year Devices & Services non-IFRS operating margin.
– Nokia and Nokia Siemens Networks continue to expect a flat market in Euro terms for the mobile and fixed infrastructure and related services market in 2010, compared to 2009.
– Nokia and Nokia Siemens Networks now target Nokia Siemens Networks to maintain its market share in 2010. This is an update to Nokia and Nokia Siemens Networks earlier target for Nokia Siemens Networks to grow faster than the market in 2010.
– Nokia and Nokia Siemens Networks continue to target Nokia Siemens Networks to reduce its non-IFRS annualized operating expenses and production overheads by EUR 500 million by the end of 2011, compared to the end of 2009.
– Nokia and Nokia Siemens Networks continue to target Nokia Siemens Networks non-IFRS operating margin of breakeven to 2% in 2010.

SECOND QUARTER 2010 FINANCIAL HIGHLIGHTS
(Comparisons are given to the second quarter 2009 results, unless otherwise indicated.)

The non-IFRS results exclusions
Q2 2010 – EUR 365 million consisting of:
– EUR 114 million restructuring charge and other associated items in Nokia Siemens Networks
– EUR 116 million of intangible asset amortization and other purchase price accounting related items arising from the formation of Nokia Siemens Networks
– EUR 131 million of intangible asset amortization and other purchase price accounting related items arising from the acquisition of NAVTEQ
– EUR 4 million of intangible assets amortization and other purchase price related items arising from the acquisition of OZ Communications, Novarra and MetaCarta in Devices & Services

Q1 2010 – EUR 332 million (net) consisting of:
– EUR 125 million restructuring charge and other associated items in Nokia Siemens Networks.
– EUR 29 million gain on sale of assets and a business in Devices & Services.
– EUR 116 million of intangible asset amortization and other purchase price accounting related items arising from the formation of Nokia Siemens Networks.
– EUR 118 million of intangible asset amortization and other purchase price accounting related items arising from the acquisition of NAVTEQ.
– EUR 2 million of intangible assets amortization and other purchase price related items arising from the acquisition of OZ Communications in Devices & Services.

Q2 2009 – EUR 348 million (net) consisting of:
– EUR 22 million of impairment of intangible assets in Devices & Services
– EUR 83 million restructuring charge in Devices & Services
– EUR 68 million gain on sale of security appliance business in Devices & Services
– EUR 69 million restructuring charge and other associated items in Nokia Siemens Networks
– EUR 121 million of intangible assets amortization and other purchase price related items arising from the formation of Nokia Siemens Networks
– EUR 119 million of intangible assets amortization and other purchase price related items arising from the acquisition of NAVTEQ
– EUR 2 million of intangible assets amortization and other purchase price related items arising from the acquisition of OZ Communications in Devices & Services.

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 i) the formation of Nokia Siemens Networks and ii) all business acquisitions completed after June 30, 2008.

Nokia Group
Nokia’s second quarter 2010 net sales increased 1% to EUR 10.0 billion, compared with EUR 9.9 billion in the second quarter 2009. At constant currency, group net sales would have decreased 4% year-on-year.

The following chart sets out the year-on-year and sequential growth rates in our net sales on a reported basis and at constant currency for the periods indicated

SECOND QUARTER 2010 NET SALES, REPORTED & CONSTANT CURRENCY1
  YoY Change QoQ Change
Group net sales – reported 1% 5%
Group net sales – constant currency1 -4% 2%
     
Devices & Services net sales – reported 3% 2%
Devices & Services net sales – constant currency1 -2% -1%
     
NAVTEQ net sales – reported 71% 33%
NAVTEQ net sales – constant currency1 69% 30%
     
Nokia Siemens Networks net sales – reported -5% 12%
Nokia Siemens Networks net sales – constant currency1 -11% 10%
     
Note 1: Change in net sales at constant currency excludes the impact of changes in exchange rates in comparison to the Euro, our reporting currency.

Nokia’s second quarter 2010 reported operating profit decreased to EUR 295 million, compared with EUR 427 million in the second quarter 2009. Nokia’s second quarter 2010 non-IFRS operating profit decreased 15% to EUR 660 million, compared with EUR 775 million in the second quarter 2009. Nokia’s second quarter 2010 reported operating margin was 2.9% (4.3%). Nokia’s second quarter 2010 non-IFRS operating margin was 6.6% (7.8%).

Operating cash flow for the second quarter 2010 was EUR 944 million. The operating cash flow for the second quarter 2009 was EUR 716 million. Total cash and other liquid assets were EUR 9.5 billion at end of the second quarter 2010, compared with EUR 7.0 billion at the end of the second quarter 2009. At the end of the second quarter 2010, Nokia’s net debt-equity ratio (gearing) was -27%, compared with -10% at the end of the second quarter 2009.

Devices & Services

As previously disclosed and discussed below, multiple factors negatively impacted Nokia’s Devices & Services business during the second quarter 2010, and we expect this to continue during the third quarter 2010.

Net Sales. Second quarter 2010 Devices & Services net sales increased 3% to EUR 6.8 billion, compared with EUR 6.6 billion in the second quarter 2009. At constant currency, Devices & Services net sales would have decreased 2% year-on-year. The net sales increase resulted primarily from higher volumes in most regions driven by stronger demand, partially offset by an ASP decline, compared to the second quarter 2009. Net sales in the second quarter 2010 were adversely impacted by the competitive environment, particularly in the high end of the market.

The following chart sets out Devices & Services net sales for the periods indicated, as well as the year-on-year and sequential growth rates, by geographic area Of our total Devices & Services net sales, services contributed EUR 158 million in the second quarter 2010, compared with EUR 148 million in the first quarter 2010. Services billings in the second quarter 2010 were EUR 295 million, compared with EUR 228 million in the first quarter 2010. Due to the divestment of the security appliance business in April 2009, services net sales of EUR 140 million and billings of EUR 207 million in the second quarter 2009 are not directly comparable to services net sales and billings in the second quarter 2010.

The following chart sets out our Devices & Services net sales for the periods indicated, as well as the year-on-year and sequential growth rates, by category.

DEVICES & SERVICES NET SALES BY GEOGRAPHIC AREA
(EUR million) Q2/2010 Q2/2009 YoY
Change
Q1/2010 QoQ Change
Europe 2 173 2 158 1% 2 186 -1%
Middle East & Africa 934 1 038 -10% 1 005 -7%
Greater China 1 373 1 136 21% 1 458 -6%
Asia-Pacific 1 543 1 568 -2% 1 363 13%
North America 223 264 -16% 219 2%
Latin America 553 422 31% 432 28%
Total 6 799 6 586 3% 6 663 2%
DEVICES & SERVICES NET SALES BY CATEGORY
(EUR million) Q2/2010 Q2/2009 3 YoY
Change3
Q1/2010 QoQ
Change
Mobile phones1 3 369 3 514 -4% 3 325 1%
Converged mobile devices2 3 429 3 064 12% 3 338 3%
Total 6 799 6 586 3% 6 663 2%
 
Note 1: Series 30 and Series 40-based devices ranging from basic mobile phones focused on voice capability to devices with a number of additional functionalities, such as Internet connectivity, including the services and accessories sold with them.
Note 2: Smartphones and mobile computers, including the services and accessories sold with them.
Note 3: Does not include the net sales of the security appliance business that was divested in April 2009.

Volume and Market Share. In the second quarter 2010, the total mobile device volumes of Devices & Services were 111.1 million units, representing an increase of 8% year-on-year and 3% sequentially. The overall industry mobile device volumes for the same period were 338 million units based on Nokia’s preliminary estimate, representing an increase of 14% year-on-year and 5% sequentially. Nokia’s preliminary estimated mobile device market share was 33% in the second quarter 2010, down from an estimated 35% in the second quarter 2009 and unchanged from an estimated 33% in the first quarter 2010 (based on Nokia’s revised definition of the industry mobile device market share applicable beginning in 2010 and applied retrospectively to 2009 for comparative purposes only).

Of the total industry mobile device volumes, converged mobile device industry volumes in the second quarter 2010 increased to 59.0 million units, based on Nokia’s preliminary estimate, compared with an estimated 41.0 million units in the second quarter 2009 and 52.6 million units in the first quarter 2010. Our own converged mobile device volumes, comprising our smartphones and mobile computers, were 24.0 million units in the second quarter 2010, an increase of 42% compared with 16.9 million units in the second quarter 2009 and 12% compared with 21.5 million units in the first quarter 2010. Nokia’s preliminary estimated share of the converged mobile device market was 41% in the second quarter 2010, compared with an estimated 41% in the second quarter 2009 and an estimated 41% in the first quarter 2010.

The following chart sets out our mobile device volumes for the periods indicated, as well as the year-on-year and sequential growth rates, by geographic area.

Nokia’s 8% year-on-year increase in global mobile device volumes was primarily driven by an improved demand environment as economic conditions had improved in most regions compared with the difficult economic conditions of the second quarter 2009. This improvement was offset to some extent by lower demand for our mobile devices in North America. On a sequential basis, Nokia’s 3% increase in global mobile device volumes primarily reflected a seasonal increase in demand in Latin America, Europe and Asia-Pacific offset to some extent by a seasonal decrease in demand in Greater China and by lower demand for our mobile devices in Middle East & Africa and North America.

Average Selling Price. Our mobile device average selling price (ASP) in the second quarter 2010 was EUR 61, down from EUR 64 in the second quarter 2009 and from EUR 62 in the first quarter 2010 (including services revenue applied retrospectively to 2009 for comparative purposes only). The lower year-on-year ASP was primarily due to a higher proportion of lower-priced converged mobile device sales and price pressure, particularly in certain high-end smartphones, offset to some extent by converged mobile devices representing a greater proportion of our overall mobile device volumes in the second quarter 2010. On a sequential basis, our lower ASP was primarily driven by price pressure, particularly in certain high-end smartphones, offset to some extent by the appreciation of certain currencies against the Euro and converged mobile devices representing a greater proportion of our overall mobile device volumes in the second quarter 2010. Our converged mobile device ASP in the second quarter 2010 was EUR 143, down from EUR 155 in the first quarter 2010 and EUR 181 in the second quarter 2009. The year-on-year and sequential declines in our converged mobile devices ASPs were mainly driven by an increase in the proportion of such devices sold at lower price points consistent with our strategy to reach wider groups of consumers, as well as price pressure in certain high-end smartphones in the second quarter 2010.

The following chart sets out our Devices & Services ASP for the periods indicated, as well as the year-on-year and sequential growth rates, by category

DEVICES & SERVICES AVERAGE SELLING PRICE BY CATEGORY
(EUR) Q2/2010 Q2/2009 YoY Change Q1/2010 QoQ Change
Mobile phones1 39 41 -5% 39 0%
Converged mobile devices2 143 181 -21% 155 -8%
Total 61 64 -4% 62 -1%
 
Note 1: Series 30 and Series 40-based devices ranging from basic mobile phones focused on voice capability to devices with a number of additional functionalities, such as Internet connectivity, including the services and accessories sold with them.
Note 2: Smartphones and mobile computers, including the services and accessories sold with them.

Profitability. Devices & Services gross profit (reported and non-IFRS) decreased 8% to EUR 2.1 billion, compared with EUR 2.2 billion in the second quarter 2009, with a gross margin (reported and non-IFRS) of 30.2% (34.0%). Devices & Services gross margin (reported and non-IFRS) was 32.4% in the first quarter 2010. The year-on-year and sequential gross margin declines were primarily due to price pressure, particularly in certain high-end smartphones, offset to some extent by converged mobile devices representing a greater proportion of our overall mobile device volumes in the second quarter 2010, compared to the second quarter 2009 and first quarter 2010. Sequentially, the gross margin decline was also due to the depreciation of the Euro against certain currencies, which led to higher cost of goods sold, and our foreign exchange hedging having a smaller positive one-quarter impact on the gross margin, as well as a mix shift towards sales of lower-gross margin converged mobile devices. During the latter part of the second quarter 2010, Devices & Services net sales and cost of goods sold were somewhat negatively impacted by industry-wide shortages of certain components and we see this situation continuing through the third quarter 2010.

Devices & Services reported operating profit decreased 16% to EUR 643 million, compared with EUR 763 million in the second quarter 2009, with a reported operating margin of 9.5% (11.6%). Devices & Services non-IFRS operating profit decreased 19% to EUR 647 million, compared with EUR 802 million in the second quarter 2009, with a non-IFRS operating margin of 9.5% (12.2%). The 19% year-on-year decrease in non-IFRS operating profit for the second quarter 2010 was driven primarily by the lower gross margin. Our operating expenses in the second quarter 2010 were also adversely impacted by the depreciation of the Euro against certain currencies, compared to the second quarter 2009.

Nokia will deliver a family of smartphones based on the Symbian^3 software platform that is targeted to offer a clearly improved user experience, a high standard of quality, and competitive value to consumers. We plan to start shipping the Nokia N8, the first Symbian^3 device, towards the end of the third quarter 2010. The Nokia N8 will be followed soon thereafter by further Symbian^3 smartphones that will give the platform broader appeal and reach.

NAVTEQ

Net Sales. Second quarter 2010 NAVTEQ reported net sales increased 71% year-on-year to EUR 252 million, compared with EUR 147 million in the second quarter 2009, benefiting from improved conditions in the automotive industry and growth in mobile device sales. At constant currency, NAVTEQ net sales would have increased 69% year-on-year.

Profitability. In the second quarter 2010, NAVTEQ’s reported gross profit increased to EUR 205 million, compared with EUR 125 million in the second quarter 2009, with a gross margin of 81.3% (85.7%). Non-IFRS gross profit was EUR 206 million (EUR 127 million), with a non-IFRS gross margin of 81.4% (85.8%). In the second quarter 2010, NAVTEQ’s reported operating loss decreased to EUR 81 million, compared with a EUR 100 million loss in the second quarter 2009. The reported operating margin was -32.1% (-68.0%). NAVTEQ’s non-IFRS operating profit was EUR 50 million (EUR 19 million), with a non-IFRS operating margin of 19.8% (12.8%) in the second quarter 2010.

Nokia Siemens Networks

Net Sales. Second quarter 2010 net sales decreased 5% to EUR 3.0 billion, compared with EUR 3.2 billion in the second quarter 2009. The decrease was primarily due to the ongoing industry-wide issue related to security clearances in India, which is preventing the completion of product sales to customers, and shortages of certain components that are affecting the broader industry; we see both of these situations continuing during the third quarter 2010. At constant currency, Nokia Siemens Networks net sales would have decreased 11% year-on-year. Of total Nokia Siemens Networks net sales, services contributed EUR 1.4 billion in the second quarter 2010.

The following chart sets out Nokia Siemens Networks net sales for the periods indicated, as well as the year-on-year and sequential growth rates, by geographic area.

NOKIA SIEMENS NETWORKS NET SALES BY GEOGRAPHIC AREA    
(EUR million) Q2/2010 Q2/2009 YoY Change Q1/2010 QoQ Change
Europe 1 136 1 209 -6% 1 065 7%
Middle East & Africa 400 459 -13% 297 35%
Greater China 357 353 1% 275 30%
Asia-Pacific 594 648 -8% 632 -6%
North America 181 208 -13% 153 18%
Latin America 371 322 15% 296 25%
Total 3 039 3 199 -5% 2 718 12%

Profitability. Nokia Siemens Networks reported gross profit increased 1% to EUR 869 million, compared with EUR 860 million in the second quarter 2009, with a gross margin of 28.6% (26.9%). Nokia Siemens Networks non-IFRS gross profit increased 4% to EUR 937 million, compared with EUR 897 million in the second quarter 2009, with a non-IFRS gross margin of 30.8% (28.0%). The higher year-on-year non-IFRS gross profit in the second quarter 2010 was primarily due to continued progress on product cost reductions and a favorable regional mix, compared to the second quarter 2009.

Nokia Siemens Networks second quarter 2010 reported operating loss was EUR 179 million, compared with a reported operating loss of EUR 188 million in the second quarter 2009, with a reported operating margin of -5.9% (-5.9%). Nokia Siemens Networks non-IFRS operating profit was EUR 51 million in the second quarter 2010, compared with a non-IFRS operating profit of EUR 2 million in the second quarter 2009, with a non-IFRS operating margin of 1.7% (0.1%). The year-on-year improvement in Nokia Siemens Networks non-IFRS operating result was primarily due to the improved gross margin.

Q2 2010 OPERATING HIGHLIGHTS

Devices & Services
– Nokia continued to build the various elements of, and attract consumers to, Ovi. Highlights for the quarter included the following:
– To support the expansion of Ovi, Nokia acquired MetaCarta Inc. to obtain its geographic intelligence technology and expertise, and Novarra Inc., whose mobile browser and services platform will be used by Nokia to deliver enhanced Internet experiences on Nokia’s Series 40-based mobile phones.
– Nokia continued to expand elements of Ovi into different markets. For example, Nokia brought its unlimited music downloads offering to China and India, as well as expanded the footprint of Ovi Life Tools, its data and entertainment service, to China.
– Ovi continued to gain further traction with consumers. For example, cumulative downloads of Ovi Maps, the free navigation offering, reached more than 17 million by the end of the quarter. Nokia also began including the offering in all its GPS-enabled smartphones out-of-the-box.
– Nokia took a significant step to building greater presence for Ovi on the web, announcing a worldwide strategic alliance with Yahoo! that will see the two companies leverage each others’ strengths in e-mail, instant messaging and maps and navigation services. As part of the alliance, Nokia will be the exclusive, global provider of Yahoo!’s maps and navigation services, integrating Ovi Maps across Yahoo! properties, branded as “powered by Ovi”, while Yahoo! will become the exclusive, global provider of Nokia’s Ovi Mail and Ovi Chat services branded as “Ovi Mail / Ovi Chat powered by Yahoo!”.
– Nokia and Microsoft launched Microsoft Communicator Mobile, the first application developed together as part of their alliance around mobile productivity. The application is available to owners of selected Nokia Eseries devices through Ovi Store.
– Nokia continued to grow and enhance the usability of Ovi Store for consumers and publishers. The release of Ovi Store 1.7 during the second quarter delivers improvements to browsing and search consumer experience. Nokia’s most popular devices each have access to more than 13 000 content items (including apps) in the store. Ovi App Wizard achieved 1 million downloads in just 10 weeks since launch with thousands of partners publishing thousands of apps. The store has been attracting on average more than 1.7 million downloads a day. Additionally, 90% of Nokia consumers who can access Ovi Store can now do so in their local language (where Ovi Store supports at least one of the country’s primary languages), while more than 80% of those with local language availability can also purchase from Ovi Store in their local currency.
– Nokia launched the Nokia N8, the first Nokia smartphone based on the next-generation Symbian^3 software that is targeted to offer a clearly improved user experience, a higher standard of quality, and competitive value to consumers. The Nokia N8 also offers industry-leading imaging, video and entertainment capabilities.
– Nokia launched a trio of Nokia C1 phones, one of which features a 2-in-1 double SIM solution. Nokia also launched the Nokia C2, a dual SIM device with dual standby capability.
– Nokia launched the Nokia Bicycle Charger Kit, an alternative charging solution built especially for people with limited access to electricity.
– Nokia started shipments of the Nokia C3, a mobile phone featuring a full QWERTY keyboard and optimized for messaging and social networking.
– Nokia launched the Nokia C6, a messaging-optimized smartphone with a 3.2-inch HD touchscreen display, a slide out four-row QWERTY keyboard and a 5 megapixel camera.
– Nokia launched the Nokia E5, a messaged-optimized smartphone that builds on the success of the Nokia E71 and Nokia E72.
– Nokia strengthened its portfolio of devices based on China’s TD-SCDMA standard with the launch of the Nokia X5 and the Nokia C5.
– Nokia launched the Nokia X2, featuring dual speakers, dedicated music keys, an FM stereo radio and support for up to 16GB of storage via a microSD card.
– Nokia started shipments of the Nokia E73 Mode, a QWERTY smartphone exclusively for T-Mobile customers in the United States.

NAVTEQ

– NAVTEQ announced the following:
– The launch of full, navigable map coverage of Bulgaria and Egypt, as well as a completely updated addressing system in the Kingdom of Saudi Arabia.
– The launch of NAVTEQ Traffic Patterns, NAVTEQ Lonely Planet Trips and NAVTEQ LocationPoint Advertising in Australia.
– An expanded visual content offering for its Singapore map, including 3D Landmarks, Enhanced 3D City Models, Junction View image and Sign-As-real images.
– Successful advertiser trials in Europe with McDonald’s and Best Western powered by NAVTEQ’s LocationPoint Advertising platform.
– Garmin’s selection of NAVTEQ Traffic for its first European connected PND service.
– An expanded agreement with the United States National Geospatial Intelligence Agency under the Homeland Security Infrastructure Program for utilization of NAVTEQ map data.
– The addition of the Lonely Planet Travel Guide(TM) to the NAVTEQ map of India.

Nokia Siemens Networks
– Nokia Siemens Networks smart device solutions, which allow improved battery life, better coverage and faster download speeds, were deployed in London to improve user experience on the O2 network. Similar contracts were agreed with many operators including Elisa in Finland, Mosaic Telecom in the United States, SFR in France, Indosat in Indonesia, Cable & Wireless Communications in the UK, Cell C in South Africa and Qatar Telecom in Qatar.
– Nokia Siemens Networks signed a full operation and maintenance managed services contract with Mobile TeleSystems in Russia, a seven-year service management and equipment supply agreement with Vodafone Hutchison in Australia and a large services contract with Telefónica O2 to expand network capacity across Germany.
– In April, Nokia Siemens Networks signed a EUR 750 million frame agreement with China Mobile and China Unicom to continue providing GSM, WCDMA and TD-SCDMA mobile network equipment and solutions.
– Nokia Siemens Networks complemented its portfolio with TD-LTE support using its common software definable Flexi Multiradio Base Station including trials in China and Taiwan, interoperability tests with Samsung devices as well as launch of the TD-LTE Open Lab in China.
– Nokia Siemens Networks continued to prepare for commercial LTE deployments with technological world-first trials, including a 75 kilometer LTE call with Telstra in Australia, the launch of Self Organizing Networks offering for LTE to reduce human error and cost, and started production of LTE-ready Flexi Multiradio Base Station radio frequency modules for 800 MHz spectrum suitable for rural areas.
– Nokia Siemens Networks achieved industry firsts with the unveiling of a migration path to 400-Gigabit-per-second optical transport and a next generation packet optical transport solution to help operators cut their costs. During the quarter Nokia Siemens Networks also delivered a major optical transport network upgrade to Aurora, Australia.
– T-Mobile UK and 3 UK awarded Nokia Siemens Networks a GBP 400 million contract to build Europe’s largest shared network (MBNL) and will offer smartphone and dongle customers the biggest 3G coverage in the United Kingdom. The HSDPA 3G network already offers outdoor coverage to more than 90% of Britain’s population.
– Vodafone Portugal selected Nokia Siemens Networks Service Broker, which is based on an OpenCloud platform and will enable the seamless convergence of legacy services with new data services, to satisfy growing subscriber demand for personalized services.

For more information on the operating highlights mentioned above, please refer to related press announcements at the following links: www.nokia.com/press , www.navteq.com/about/press.html, www.nokiasiemensnetworks.com/press

NOKIA IN THE SECOND QUARTER 2010
(The following discussion is of Nokia’s reported results. Comparisons are given to the second quarter 2009 results, unless otherwise indicated.)

Nokia’s net sales increased 1% to EUR 10 003 million (EUR 9 912 million). Net sales of Devices & Services increased 3% to EUR 6 799 million (EUR 6 586 million). Net sales of NAVTEQ increased 71% to EUR 252 million (EUR 147 million). Net sales of Nokia Siemens Networks decreased 5% to EUR 3 039 million (EUR 3 199 million).

Operating profit decreased 31% to EUR 295 million (EUR 427 million), representing an operating margin of 2.9% (4.3%). Operating profit in Devices & Services decreased 16% to EUR 643 million (EUR 763 million), representing an operating margin of 9.5% (11.6%). Operating loss in NAVTEQ was EUR 81 million (operating loss EUR 100 million), representing an operating margin of -32.1% (-68.0%). Operating loss in Nokia Siemens Networks was EUR 179 million (operating loss EUR 188 million), representing an operating margin of -5.9% (-5.9%). Group Common Functions reported expense totaled EUR 33 million (EUR 48 million).

In the period from April to June 2010, net financial expense was EUR 68 million (EUR 61 million). Profit before tax was EUR 221 million (EUR 380 million). Profit was EUR 104 million (EUR 287 million), based on a profit of EUR 227 million (EUR 380 million) attributable to equity holders of the parent and a loss of EUR 123 million (loss of EUR 93 million) attributable to non-controlling interests. Earnings per share decreased to EUR 0.06 (basic) and to EUR 0.06 (diluted), compared with EUR 0.10 (basic) and EUR 0.10 (diluted) in the second quarter of 2009.

NOKIA IN JANUARY – JUNE 2010
(The following discussion is of Nokia’s reported results. Comparisons are given to the January-June 2009 results, unless otherwise indicated.)

Nokia’s net sales increased 2% to EUR 19 525 million (EUR 19 186 million). Net sales of Devices & Services increased 6% to EUR 13 462 million (EUR 12 759 million). Net sales of NAVTEQ were EUR 441 million (EUR 279 million). Net sales of Nokia Siemens Networks decreased 7% to EUR 5 757 million (EUR 6 189 million).

Operating profit increased 62% to EUR 783 million (EUR 482 million), representing an operating margin of 4.0% (2.5%). Operating profit in Devices & Services increased 13% to EUR 1 474 million (EUR 1 310 million), representing an operating margin of 10.9% (10.3%). Operating loss in NAVTEQ was EUR 158 million (loss of EUR 220 million), representing an operating margin of -35.8% (-78.9%). Operating loss in Nokia Siemens Networks was EUR 405 million (loss of EUR 549 million), representing an operating margin of -7.0% (-8.9%). Corporate Common Functions reported expense totaled EUR 53 million (EUR 59 million).

In the period from January to June 2010, net financial expense was EUR 141 million (net financial expense EUR 138 million). Profit before tax was EUR 632 million (EUR 368 million). Profit was EUR 279 million (EUR 291 million), based on a profit of EUR 576 million (EUR 502 million) attributable to equity holders of the parent and a loss of EUR 297 million (loss EUR 211 million) attributable to non controlling interests. Earnings per share increased to EUR 0.16 (basic) and EUR 0.16 (diluted), compared with EUR 0.14 (basic) and EUR 0.13 (diluted) in January-June 2009.

PERSONNEL
The average number of employees during the period from January to June 2010 was 126 876, of which the average number of employees at Nokia Siemens Networks was 64 759. At June 30, 2010, Nokia employed a total of 129 746 people (120 827 people at June 30, 2009), of which 65 251 were employed by Nokia Siemens Networks (60 983 people at June 30, 2009).

SHARES
The total number of Nokia shares at June 30, 2010 was 3 744 956 052. At June 30, 2010, Nokia and its subsidiary companies owned 36 112 670 Nokia shares, representing approximately 1.0 % of the total number of Nokia shares and the total voting rights.

1 EUR = 1.234 USD

The unaudited, consolidated interim financial statements of Nokia have been prepared in accordance with the International Financial Reporting Standards (“IFRS”). The same accounting policies and methods of computation are followed in the interim financial statements as were followed in the consolidated financial statements of Nokia for 2009.

The complete press release with tables is available at:
http://www.nokia.com/results/Nokia_results2010Q2e.pdf

FORWARD-LOOKING STATEMENTS
It should be noted that certain statements herein which are not historical facts are forward-looking statements, including, without limitation, those regarding: A) the timing of the deliveries of our products and services and their combinations; B) our ability to develop, implement and commercialize new technologies, products and services and their combinations; C) expectations regarding market developments and structural changes; D) expectations and targets regarding our industry volumes, market share, prices, net sales and margins of products and services and their combinations; E) expectations and targets regarding our operational priorities and results of operations; F) the outcome of pending and threatened litigation; G) expectations regarding the successful completion of acquisitions or restructurings on a timely basis and our ability to achieve the financial and operational targets set in connection with any such acquisition or restructuring; and H) statements preceded by “believe,” “expect,” “anticipate,” “foresee,” “target,” “estimate,” “designed,” “plans,” “will” or similar expressions. 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 competitiveness and quality of our portfolio of products and services and their combinations; 2) our ability to timely and successfully develop or otherwise acquire the appropriate technologies and commercialize them as new advanced products and services and their combinations, including our ability to attract application developers and content providers to develop applications and provide content for use in our devices; 3) our ability to effectively, timely and profitably adapt our business and operations to the requirements of the converged mobile device market and the services market; 4) the intensity of competition in the various markets where we do business and our ability to maintain or improve our market position or respond successfully to changes in the competitive environment; 5) the occurrence of any actual or even alleged defects or other quality, safety or security issues in our products and services and their combinations; 6) the development of the mobile and fixed communications industry and general economic conditions globally and regionally; 7) our ability to successfully manage costs; 8) exchange rate fluctuations, including, in particular, fluctuations between the euro, which is our reporting currency, and the US dollar, the Japanese yen and the Chinese yuan, as well as certain other currencies; 9) the success, financial condition and performance of our suppliers, collaboration partners and customers; 10) our ability to source sufficient amounts of fully functional components, sub-assemblies, software, applications and content without interruption and at acceptable prices and quality; 11) our success in collaboration arrangements with third parties relating to the development of new technologies, products and services, including applications and content; 12) our ability to manage efficiently our manufacturing and logistics, as well as to ensure the quality, safety, security and timely delivery of our products and services and their combinations; 13) our ability to manage our inventory and timely adapt our supply to meet changing demands for our products; 14) 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 and services and their combinations; 15) our ability to protect numerous Nokia, NAVTEQ and Nokia Siemens Networks patented, standardized or proprietary technologies from third-party infringement or actions to invalidate the intellectual property rights of these technologies; 16) the impact of changes in government policies, trade policies, laws or regulations and economic or political turmoil in countries where our assets are located and we do business; 17) any disruption to information technology systems and networks that our operations rely on; 18) our ability to retain, motivate, develop and recruit appropriately skilled employees; 19) unfavorable outcome of litigations; 20) allegations of possible health risks from electromagnetic fields generated by base stations and mobile devices and lawsuits related to them, regardless of merit; 21) our ability to achieve targeted costs reductions and increase profitability in Nokia Siemens Networks and to effectively and timely execute related restructuring measures; 22) developments under large, multi-year contracts or in relation to major customers in the networks infrastructure and related services business; 23) the management of our customer financing exposure, particularly in the networks infrastructure and related services business; 24) whether ongoing or any additional governmental investigations into alleged violations of law by some former employees of Siemens AG (“Siemens”) may involve and affect the carrier-related assets and employees transferred by Siemens to Nokia Siemens Networks; 25) any impairment of Nokia Siemens Networks customer relationships resulting from ongoing or any additional governmental investigations involving the Siemens carrier-related operations transferred to Nokia Siemens Networks; as well as the risk factors specified on pages 11-32 of Nokia’s annual report Form 20-F for the year ended December 31, 2009 under Item 3D. “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 publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required.

Nokia, Helsinki – July 22, 2010

The complete press release with tables is available at:
http://www.nokia.com/results/Nokia_results2010Q2e.pdf

Source: www.nokia.com

Motorola, Inc. Q4 2009 Earnings Call

Operator

Good morning and thank you for holding. Welcome to Motorola’s fourth quarter 2009 earnings conference call. Today’s call is being recorded. If you have any objections, please disconnect at this time. The presentation material and additional financial tables are currently posted on Motorola’s Investor Relations website.

In addition, a replay of this conference will be available approximately three hours after the conclusion of this call over the Internet through Motorola’s Investor Relations website. The website address is www.motorola.com/investor. At this time, all participants have been placed in a listen-only mode and the floor will be open for your questions following the presentation.

I would now like to introduce Mr. Dean Lindroth, Corporate Vice President of Investor Relations. Mr. Lindroth, you may begin your conference.

Dean Lindroth

Thank you, and good morning. Welcome to Motorola’s fourth quarter results conference call. Today’s call will include prepared remarks by Sanjay Jha, Co-Chief Executive Officer of Motorola and CEO of Mobile Devices; Greg Brown, Co-Chief Executive Officer of Motorola and CEO of Broadband Mobility Solutions; and Ed Fitzpatrick, Motorola’s Chief Financial Officer.

A number of forward-looking statements will be made during this presentation. Forward-looking statements are any statements that are not historical facts. These forward-looking statements are based on the current expectations of Motorola and there can be no assurance that such expectations will prove to be correct.

Because forward-looking statements involve risks and uncertainties, Motorola’s actual results could differ materially from these statements. Information about factors that could cause and in some cases, have caused such differences can be found in this morning’s press release on pages 18 through 30 and Item 1A of Motorola’s 2008 Annual Report on Form 10-K and in Motorola’s other SEC filings.

This presentation is being made on the 28th of January 2010. The content of this presentation contains time-sensitive information that is accurate only as of the time hereof. If any portion of this presentation is rebroadcast, retransmitted, or redistributed at a later date, Motorola will not be reviewing or updating the material that is contained herein.

I will now turn the call over to Sanjay.

Sanjay Jha

Thanks, Dean. Good morning and thank you for joining us. This morning, Motorola reported results for the fourth quarter and full year 2009. Sales in the quarter were $5.7 billion and net earnings, excluding highlighted items, were $0.09 per share. For the year, sales were $22 billion and net earnings from continuing operations, excluding highlighted items, were $0.02 per share.

Throughout last year, all of our businesses focused on reducing cost, improving cash flow, and providing innovative products and solutions to our customers. In 2009, we reduced our overall cost structure by over $1.9 billion with $1.5 billion coming from – in Mobile Devices.

We generated over $870 million in operating cash flow in the fourth quarter, ending the year with $8 billion in total cash, up nearly $600 million from the end of 2008. In Mobile Devices, we reduced product platform, simplified processes, and delivered two Android-powered smartphone on time in the fourth quarter, all while implementing a major restructuring of the business.

Our new devices have been well received by consumers, resulting in shipments of 2 million smartphones in the fourth quarter. In 2009, we significantly reduced Mobile Devices operating loss and cash consumption compared to 2008. All that said, we are just at the beginning stage of our transition to a smartphone company, and we have a lot of work ahead of us.

Broadband Mobility Solutions delivered over $1.6 billion in operating earnings for the full year despite the economic headwinds, continued to prioritize R&D to position this business for future growth and sustainable market leadership and introduced industry-leading products, including a next generation mission-critical communication platform with APX family of multi-band radios and our most advanced rugged mobile computer with the MC9500.

As we head into 2010, our markets remain extremely competitive, but offer opportunities for growth. Across the company, our priorities will continue to focus on driving innovation, solving customer needs, optimizing our cost structure, and improving our financial results.

I’ll now turn the call over to Ed to review the financial results in more detail. Following that, I’ll come back to discuss Mobile Devices and then Greg will review Broadband Mobility Solutions. Ed?

Ed Fitzpatrick

Thanks, Sanjay. Total sales were $5.7 billion in the quarter and $22 billion for the full year. On a GAAP basis, we reported fourth quarter net earnings of $0.06 per share, which includes net charges of $0.03 per share for highlighted items, which relate primarily to cost associated with business reorganization comparing for separation in two public companies and legal settlements, which are partially offset by a gain in the sales and investment.

Excluding highlighted items, earnings were $0.09 per share in the fourth quarter compared to $0.02 per share in the third quarter. The sequential increase in earnings was driven by the increase in sales and improving gross margin percentage, as well as lower other income and expense costs.

For the full year, on a GAAP basis, we reported a net loss from continuing operations of $0.05 per share compared to a loss of $1.87 per share in 2008. Excluding highlighted items, earnings from continuing operations were $0.02 per share, flat with 2008. Consistent with previously reported results, earnings include non-cash charges for amortization of intangibles and stock-based compensation expense. During this quarter, we will provide details on these expenses to give you additional insight into our earnings performance.

For the quarter and full year on a pretax basis, stock-based compensation expense were $71 million and $296 million respectively. Amortization of intangibles was $68 million and $278 million respectively. Together these expenses impacted earnings per share by $0.04 in the quarter and by $0.16 for the full year. Further details on our highlighted items, stock compensation expense and amortization of intangibles can be found on our Web site. Our remaining financial references will exclude highlighted items and include stock compensation expense and amortization of intangibles.

Gross margin percentage in the quarter was 36% compared to 33.2% in the third quarter. Sequential improvement was due largely to favorable product mix in Enterprise Mobility Solutions and Mobile Devices as well as further supply chain efficiencies in Mobile Devices. For the full year, gross margin percentage improved to 32.3% from 29.9% in 2008, driven largely by the change in our overall sales mix among the businesses

To Read More Please Click Here..

Nokia: FOURTH QUARTER 2009 HIGHLIGHTS

FOURTH QUARTER 2009 HIGHLIGHTS
Nokia net sales of EUR 12.0 billion, down 5% year on year and up 22% sequentially (down 4% and up 20% at constant currency).

Devices & Services net sales of EUR 8.2 billion, up 0.5% year on year and up 18% sequentially (up 2% and 16% at constant currency).

Services net sales of EUR 169 million, up 15% sequentially; billings of EUR 226 million, up 31% sequentially.

Estimated industry mobile device volumes of 329 million units, up 8% year on year and up 14% sequentially.

Nokia mobile device volumes of 126.9 million units, up 12% year on year and up 17% sequentially.

Nokia estimated mobile device market share of 39% in Q4 2009, up from an estimated 37% in Q4 2008 and 38% in Q3 2009. The full year 2009 estimated market share was 38%, down from 39% in 2008.

Nokia grew its converged device market share to an estimated 40%, from an estimated 35% in Q3 2009.

Nokia improved the ASP of its mobile devices to EUR 63, from EUR 62 in Q3 2009.

Devices & Services increased its gross margin to 34.3%, from 30.9% in Q3 2009.

NAVTEQ non-IFRS net sales of EUR 225 million, up 9% year on year and up 36% sequentially, and non-IFRS operating margin of 24.0%, down from 25.9% in Q3 2009.

Nokia Siemens Networks net sales of EUR 3.6 billion, down 16% year on year and up 31% sequentially (down 17% and up 29% at constant currency).

Nokia operating cash flow of EUR 1.5 billion, more than double the operating cash flow for Q3 2009.

Total cash and other liquid assets of EUR 8.9 billion at the end of Q4 2009.

Nokia taxes were unfavorably impacted by Nokia Siemens Networks taxes as no tax benefits are recognized for certain Nokia Siemens Networks deferred tax items. If Nokia’s estimated long-term tax rate of 26% had been applied, non-IFRS Nokia EPS would have been approximately 1 Euro cent higher.

INDUSTRY AND NOKIA OUTLOOK

Nokia expects Devices & Services net sales to be between EUR 6.5 billion and EUR 7.0 billion in the first quarter 2010.

Nokia expects its non-IFRS operating margin in Devices & Services in the first quarter 2010 to be negatively impacted by seasonality and to be at the lower end of the range of its full year 2010 target, which continues to be 12% to 14%.

Nokia and Nokia Siemens Networks expect Nokia Siemens Networks’ net sales to be between EUR 2.6 billion and EUR 2.9 billion in the first quarter 2010.

Nokia and Nokia Siemens Networks expect the non-IFRS operating margin in Nokia Siemens Networks in the first quarter 2010 to be negatively impacted by seasonality and to be below the full year 2010 target, which continues to be breakeven to 2%.

Nokia continues to expect industry mobile device volumes to be up approximately 10% in 2010, compared to 2009.

Nokia continues to target its mobile device volume market share to be flat in 2010, compared to 2009.

Nokia continues to target to increase its mobile device value market share slightly in 2010, compared to 2009.

Nokia continues to target non-IFRS operating expenses in Devices & Services of approximately EUR 5.7 billion in 2010.

Nokia and Nokia Siemens Networks continue to expect a flat market in euro terms for the mobile and fixed infrastructure and related services market in 2010, compared to 2009.

Nokia and Nokia Siemens Networks continue to target Nokia Siemens Networks to grow faster than the market in 2010.

Nokia and Nokia Siemens Networks continue to target Nokia Siemens Networks to reduce its non-IFRS annualized operating expenses and production overheads by EUR 500 million by the end of 2011, compared to the end of 2009.

FOURTH QUARTER 2009 FINANCIAL HIGHLIGHTS

(Comparisons are given to the fourth quarter 2008 results, unless otherwise indicated.)

The non-IFRS results exclusions

Q4 2009 — EUR 332 million (net) consisting of:

EUR 89 million restructuring charge and other one-time items in Nokia Siemens Networks

EUR 22 million gain on sale of real estate in Nokia Siemens Networks

EUR 36 million restructuring charge in Devices & Services

EUR 117 million of intangible asset amortization and other purchase price accounting related items arising from the formation of Nokia Siemens Networks

EUR 110 million of intangible asset amortization and other purchase price accounting related items arising from the acquisition of NAVTEQ

EUR 2 million of intangible assets amortization and other purchase price related items arising from the acquisition of OZ Communications in Devices & Services

Q4 2009 taxes — EUR 213 million non-cash positive effect from development and outcome of various prior year items impacting Nokia taxes

To read more Visit Nokia

Samsung Electronics Reports Third Quarter 2009 Results

Samsung Electronics Reports Third Quarter 2009 Results: Consolidated Revenues of 35.87 trillion won, Operating Profit of 4.23 trillion won

Samsung Electronics Co., Ltd.  announced revenues of 35.87 trillion Korean won on a consolidated basis for the third quarter ended September 30, 2009, an 18.5 percent increase year-on-year.

Consolidated operating profit for the quarter was 4.23 trillion won, a 185.8 percent increase year-on-year and up 67.8 percent from the previous quarter. Income before income taxes reached 4.62 trillion won on a consolidated basis. Net income, on a parent company basis, was 3.72 trillion won.

In its earnings guidance disclosed on October 6, Samsung estimated third quarter consolidated revenues would reach 36 trillion won with an operating profit of 4.1 trillion won.

Amid improving global consumer sentiment, Samsung recorded strong results across both major business units – Device Solutions and Digital Media & Communications. For the Device Solutions Business, seasonal demand for key components including memory chips and LCD panels supported a sustained profit recovery, while the Digital Media & Communications Business continued to enhance its market share in mobile phones, flat panel TVs and other premium electronics segments.

“Samsung achieved an outstanding operating profit in the third quarter, with our components and product set businesses performing strongly in tandem,” said Robert Yi, Vice President and Head of Samsung Electronics’ Investor Relations Team.

“Looking ahead, we forecast a solid fourth quarter supported by seasonal demand for consumer electronics, though the appreciation of the won and increased marketing expenses may lead to a quarter-on-quarter decline in profit. Samsung has made great progress in strengthening its market leadership throughout 2009, and we believe the outlook is positive for further growth as the global economic recovery continues into 2010,” he said.

Capital expenditure on a parent company basis for the third quarter was 1.34 trillion won, including 1.08 trillion won for Semiconductor and 180 billion won for LCD facilities. Samsung expects consolidated capital expenditure for the whole year of 2009 to reach 7 trillion won, including 4 trillion for Semiconductor and 2 trillion for LCD, more than initially planned.

Samsung expects to increase capital expenditure further in 2010, with more than 5.5 trillion won planned for its memory business to respond to rising demand and 3 trillion won for LCD.

Additionally, Samsung forecast a weak U.S. dollar will not significantly impact its financial performance as U.S. currency takes only 50 percent of its exchange position. Samsung said its product set business is more influenced by the Euro and Yen. A strong Euro and Yen will enable Samsung to maintain its price competitiveness alongside European and Japanese set manufacturers.

Semiconductor Price Rise Boosts Profit

Samsung’s Semiconductor divisions recorded a consolidated basis operating profit of 1.15 trillion won. Revenue reached 7.46 trillion won, a 25.3 percent increase year-on-year.

The significant improvement in operating profit in the third quarter was aided by a rise in market prices for memory chips and increased demand. In DRAM, the average sales price increased 20 percent quarter-on-quarter helped by strong PC sales, while spot prices for 1Gb DDR2 were up 28 percent from the previous quarter. Spot prices for 16Gb MLC NAND flash memory increased 9 percent quarter-on-quarter.

Samsung forecast its Semiconductor divisions will continue to perform strongly moving forward through its technological advantage and cost competitiveness.

LCD Demand Up

The LCD Division recorded an operating profit of 1.01 trillion won as revenue reached 6.73 trillion won, a 20.6 percent increase year-on-year.

Strong seasonal demand for LCD panels from set makers resulted in increased unit sales and higher prices. Samsung shipped 148 million large-sized LCD panels in the third quarter, up 15 percent quarter-on-quarter and 26 percent from the same period last year.

Average sales prices increased across all segments including panels for TVs (up 16 percent), monitors (up 17 percent) and notebook computers (up 22 percent). Samsung’s improved operating profit was also supported by increased sales of premium LED and 240Hz TV panels.

Samsung forecast sales to decline in the fourth quarter due to weak seasonality but expected performance to be in line with the previous year. The LCD Division aims enhance its market leadership by expanding its share of the high-end market, including 16:9 aspect ratio panels and eco-friendly products, while expanding partnerships with customers in emerging markets such as China.

Mobile Market Share Expected to Hit 20 Percent

Samsung’s Telecommunications divisions registered an operating profit of 1.03 trillion won for the third quarter. Revenue reached 10.71 trillion won, a 20.6 percent increase year-on-year.

Samsung continued its outstanding performance in mobile handsets for 2009, with sales increasing 15 percent quarter-on-quarter to 60.2 million units in the three month period. The company’s global market share is estimated to have exceeded 20 percent for the first time, recording a projected 20.8 percent share after reaching 19.2 percent in the second quarter.

While expenses for the quarter increased, Samsung maintained its profit margin through sales of feature-rich touch screen handsets and other premium devices. Across the industry, average sales price declined 3 percent to $120 quarter-on-quarter.

Samsung said it was well on track to beat its full year 2009 target of 200 million in mobile handset unit sales. Projecting a positive outlook for the fourth quarter, Samsung aims to continue to strengthen partnerships with key mobile carriers while further expanding its product lineup. The Telecommunication Systems Division will continue to grow its mobile WiMAX business in Latin and North America, the Middle East and Asia.

Outperforms in Flat Panel TV Market

Samsung’s Digital Media divisions registered an operating profit of 940 billion won, a 147 percent increase year-on-year. Revenue reached 12.37 trillion won, an increase of 14.7 percent year-on-year.

In flat panel TVs, Samsung recorded unit sales of 7.73 million, up 22 percent quarter-on-quarter and 24 percent on the same period last year. Samsung’s new line of LED TVs continued to sell strongly, with 1.2 million units sold since their debut and a target of 2.5 million units for the year.

Sales for the Digital Appliance Division decline 2 percent quarter-on-quarter, but it said market share for premium products including refrigerators and drum washing machines increased.

Samsung forecast strong sales growth entering the fourth quarter, typically the peak sales season for TVs and other appliances. Sales for LCD TVs were projected to increase 25 percent quarter-on-quarter, while PDP TV sales were expected to rise 26 percent.

Source: Samsung Electronics

Hitachi Announces Financial Results for Q2

Hitachi Announces Financial Results for Q2

Download Complete Report from Hitachi

Fujitsu Reports Fiscal 2009 Second-Quarter Financial Results

Fujitsu Reports Fiscal 2009 Second-Quarter Financial Results
– Profitability improves dramatically from first quarter –
(Source: Fujitsu)

Fujitsu, a leading provider of IT-based business solutions for the global marketplace,  reported consolidated net income of 72.4 billion yen (US$804 million) for the second quarter (July 1 – September 30, 2009) of fiscal 2009.

Net income increased 68.1 billion yen compared with the second quarter of fiscal 2008 due primarily to a gain on the sale of investment securities. Second-quarter operating income totaled 18.9 billion yen (US$210 million), representing a decline of 13.8 billion yen from a year ago, but a significant improvement from the operating loss of 37.1 billion yen in the first quarter of fiscal 2009.

Quarterly net sales totaled 1,142.3 billion yen (US$12,692 million), a decline of 10.5% compared to the same period last year and an increase of 9.4% from the first quarter of 2009.

The profitability of the core Technology Solutions business, comprising IT services and system platforms, rebounded strongly in the second quarter compared with the first quarter, while losses in the Device Solutions business narrowed sharply thanks to a rebound in demand for logic LSI products and aggressive business reform measures. In the Ubiquitous Product Solutions business, despite an increase in mobile phone sales in Japan, second-quarter revenue declined both versus the same period last year and the first quarter of 2009.

On a geographic basis, second-quarter profitability in and outside Japan declined compared with the same period last year, but improved in each region compared with the first quarter. In Japan, in particular, operating income rebounded from an operating loss of 12.3 billion yen in the first quarter to an operating profit of 33.3 billion yen.

For the first half of fiscal 2009 (April 1 – September 30, 2009), the company posted net sales of 2,186.6 billion yen (US$24,296 million), a decline of 10.9% compared with the same period in fiscal 2008, an operating loss of 18.2 billion yen (US$202 million), which marked a 16.7-billion-yen improvement over the target but a deterioration compared with operating income of 38.5 billion in the first half of last year. Net income totaled 43.2 billion yen (US$480 million), an improvement of 28.2 billion yen over the target and 38.6 billion yen over last year.

“For the first half of the year, we beat our earnings target despite a very challenging business environment,” said Michiyoshi Mazuka, president of Fujitsu Limited. “I’m confident that the resiliency of our core businesses and our dedication to lean, customer-centric management will enable us to meet our targets for the full year.”

Business Segment Results

Second-quarter net sales in the Technology Solutions segment, which includes the System Platforms and Services sub-segments, totaled 754.1 billion yen (US$8,379 million), declining 8.8% compared to the same period in fiscal 2008. Sales in Japan decreased by 14.1% due to lower solutions sales in the financial services, manufacturing and distribution sectors. Sales outside Japan declined 6% after adjusting to negate exchange rate fluctuations and the impact of the conversion of Fujitsu Siemens Computers into a consolidated subsidiary (subsequently renamed Fujitsu Technology Solutions (Holding) B.V.). Operating income for the segment was 37.6 billion yen (US$418 million), a deterioration of 11.4 billion yen over the same period last year, due to the sales decline and special charges. Compared with the first quarter, segment sales increased 12.9% and operating income rebounded from the loss of 15.3 billion yen.

Net sales in the Ubiquitous Product Solutions segment were 235.8 billion yen (US$2,620 million), a decrease of 5.5% from the same period in fiscal 2008. Sales in Japan fell by 14.2%, while sales outside Japan declined 28% on an adjusted basis. Although mobile phone sales in Japan increased, intensified price competition and weaker corporate demand led to a decline in PC sales worldwide. HDD sales also declined worldwide. The segment posted operating loss of 3.5 billion yen (US$39 million), a deterioration from the loss of 1.0 billion yen a year ago as well as the first-quarter profit.

Net sales in the Device Solutions segment totaled 137.2 billion yen (US$1,524 million), a decrease of 23.2% compared to the second quarter of fiscal 2008. Sales of logic LSI devices rebounded strongly from the first quarter, but remained significantly lower compared to a year ago. The segment posted an operating loss of 1.6 billion yen (US$18 million), an improvement of 0.9 billion yen from last year’s second quarter.

Fiscal 2009 Consolidated Earnings Projections

The company’s current earnings projections for fiscal 2009 are presented below.

 (billion yen)
  FY 2008
(Actual)
FY 2009
(Forecast)
Change
Net Sales 4,692.9 4,800.0 107.0
Operating Income 68.7 90.0 21.2
Net Income

Complete information on Fujitsu’s financial results, including financial tables, explanation of results and supplementary information, may be found at: http://www.fujitsu.com/about/ir/

* All yen figures have been converted to U.S. dollars for convenience only at a uniform rate of US$1 = 90 yen, the approximate closing rate on September 30, 2009.

Note: These materials may contain forward-looking statements that are based on management’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Actual results may differ materially from those projected or implied in the forward-looking statements due to, without limitation, the following factors:
– General economic and market conditions in key markets (particularly in Japan, North America, Europe and Asia, including China)
– Rapid changes in the high-technology market (particularly semiconductors, PCs, etc.)
– Fluctuations in exchange rates or interest rates
– Fluctuations in capital markets
– Intensifying price competition
– Changes in market positioning due to competition in R&D
– Changes in the environment for the procurement of parts and components
– Changes in competitive relationships relating to collaborations, alliances and technical provisions
– Potential emergence of unprofitable projects
– Changes in accounting

——————————————————————————–

About Fujitsu
Fujitsu is a leading provider of IT-based business solutions for the global marketplace. With approximately 175,000 employees supporting customers in 70 countries, Fujitsu combines a worldwide corps of systems and services experts with highly reliable computing and communications products and advanced microelectronics to deliver added value to customers. Headquartered in Tokyo, Fujitsu Limited (TSE:6702) reported consolidated revenues of 4.6 trillion yen (US$47 billion) for the fiscal year ended March 31, 2009. For more information, please see: www.fujitsu.com.

Canon announced 3rd quarter results

Canon announced 3rd quarter results

To view results in HTML visit following link:

http://www.canon.com/ir/conf2009q3/p01.html

To View PDF download using following link:

http://www.canon.com/ir/conf2009q3/conf2009q3e.pdf

4th Quarter: Most Profitable Quarter Ever Record Mac and iPhone Sales

Apple Reports Fourth Quarter Results (Source: Apple)
Most Profitable Quarter Ever; Record Mac and iPhone Sales

Apple announced financial results for its fiscal 2009 fourth quarter ended September 26, 2009. The Company posted revenue of $9.87 billion and a net quarterly profit of $1.67 billion, or $1.82 per diluted share. These results compare to revenue of $7.9 billion and net quarterly profit of $1.14 billion, or $1.26 per diluted share, in the year-ago quarter. Gross margin was 36.6 percent, up from 34.7 percent in the year-ago quarter. International sales accounted for 46 percent of the quarter’s revenue.

In accordance with the subscription accounting treatment required by GAAP, the Company recognizes revenue and cost of goods sold for iPhone™ and Apple TV® over their estimated economic lives. Adjusting GAAP sales and product costs to eliminate the impact of subscription accounting, the corresponding non-GAAP measures* for the quarter are $12.25 billion of “Adjusted Sales” and $2.85 billion of “Adjusted Net Income.”

Apple sold 3.05 million Macintosh® computers during the quarter, representing a 17 percent unit increase over the year-ago quarter. The Company sold 10.2 million iPods during the quarter, representing an eight percent unit decline from the year-ago quarter. Apple sold 7.4 million iPhones in the quarter, representing seven percent unit growth over the year-ago quarter.

“We are thrilled to have sold more Macs and iPhones than in any previous quarter,” said Steve Jobs, Apple’s CEO. “We’ve got a very strong lineup for the holiday season and some really great new products in the pipeline for 2010.”

“We are delighted with our September quarter and fiscal 2009 results,” said Peter Oppenheimer, Apple’s CFO. “For the full year, we grew revenue by 12 percent and net income by 18 percent in extraordinarily challenging times. Looking ahead to the first fiscal quarter of 2010, we expect revenue in the range of about $11.3 billion to $11.6 billion and we expect diluted earnings per share in the range of about $1.70 to $1.78.”

Apple will provide live streaming of its Q4 2009 financial results conference call utilizing QuickTime®, Apple’s standards-based technology for live and on-demand audio and video streaming. The live webcast will begin at 2:00 p.m. PDT on October 19, 2009 at www.apple.com/quicktime/qtv/earningsq409/ and will also be available for replay for approximately two weeks thereafter.

*Non-GAAP Financial Measures

During fiscal 2007, the Company began selling iPhone and Apple TV. Because the Company may provide unspecified features and additional software products to iPhone and Apple TV customers in the future free of charge, in accordance with GAAP, specifically FASB ASC 985-605, formerly known as AICPA SOP 97-2, the Company recognizes revenue and cost of goods sold for these products on a straight-line basis over their economic lives, with any loss recognized at the time of sale. Currently, the economic lives of these products are estimated to be 24 months. This accounting treatment, referred to as subscription accounting, results in the deferral of almost all of the revenue and cost of goods sold during the quarter in which the products are sold to the customer. Other costs related to these products, including costs for engineering, sales, marketing and warranty, are expensed as incurred. Further, the costs to develop any future unspecified features and additional software products that may eventually be provided to customers also are expensed as incurred. In contrast, the Company generally recognizes revenue and cost of goods sold for its other products, such as Macs and iPods, at the time of sale, as the Company does not provide future unspecified features or additional software products to those customers free of charge.

In July 2008, the Company began selling iPhone 3G, the second-generation iPhone, and at that time significantly expanded distribution by establishing carrier relationships in over 70 countries. Unit sales of iPhone 3G have been significantly greater than sales of the first-generation iPhone. During the first quarter of iPhone 3G availability ended September 27, 2008, 6.9 million units were sold, exceeding the 6.1 million first-generation iPhone units sold in the prior five quarters combined.

In June 2009, the Company began selling iPhone 3GS, the third-generation iPhone. Unit sales of iPhones continued to be significant in the quarter ended September 26, 2009, with 7.4 million iPhones sold. As a result, the amount of revenue and product cost related to those iPhone sales that the Company deferred for recognition in future periods under subscription accounting was substantial. While the GAAP results provide significant insight into the Company’s operations and financial position, management continues to supplement its analysis of the business using financial measures that look at the total sales, related product costs and resulting income for iPhones and Apple TVs sold to customers during the period. The presentation at the end of this press release includes the following non-GAAP measures: “Adjusted Sales,” “Adjusted Cost of Sales,” “Adjusted Gross Margin,” “Adjusted Operating Margin,” “Adjusted Net Income” and “Adjusted Diluted Earnings per Share.” These financial measures are not consistent with GAAP because they do not reflect the deferral of revenue and product costs for recognition in later periods. The above-mentioned non-GAAP measures are generated by adjusting the related GAAP measures solely to reverse the effect of subscription accounting. The Company uses these financial measures, along with other measures discussed below, to provide additional insight into current operating and business trends not readily apparent from the GAAP results.

Management uses Adjusted Sales to evaluate the Company’s growth rate, revenue mix and performance relative to competitors. Given the impact of iPhone unit sales during the quarter ended September 26, 2009, Adjusted Sales provides a meaningful measurement of the Company’s growth by reflecting amounts generally due to Apple at the time of sale related to products sold within the period. Further, eliminating the effects of deferred revenue (current sales deferred to future periods and prior sales being recognized currently) provides more transparency into the Company’s underlying sales trends. Management uses the non-GAAP measures of “Adjusted Cost of Sales,” “Adjusted Gross Margin” and “Adjusted Operating Margin” to measure the Company’s operating performance based on current period iPhone and Apple TV sales and to facilitate ongoing operating decisions. Additionally, because the Company recognizes engineering, sales, and marketing expenses as incurred, including expenses related to iPhone and Apple TV, management uses Adjusted Sales to evaluate returns on those costs, to manage year-over-year operating expense growth, and to budget future expenses. Furthermore, because they are considered meaningful indicators of current business performance, the non-GAAP measures “Adjusted Sales” and “Adjusted Operating Margin” are metrics that factor into the determination of management compensation beginning in fiscal year 2009. Finally, management uses the non-GAAP measures of “Adjusted Net Income” and “Adjusted Diluted Earnings per Share” to measure the Company’s operating performance based on current period iPhone and Apple TV sales, to facilitate ongoing operating decisions, and compare performance relative to competitors.

Management believes that these non-GAAP financial measures, when taken together with the corresponding consolidated GAAP measures and related segment information, provide incremental insight into the underlying factors and trends affecting both the Company’s performance and its cash generating potential. Management believes these non-GAAP measures increase the transparency of the Company’s current results and enable investors to more fully understand trends in its current and future performance.

Cautions on Use of Non-GAAP Measures

As noted previously, these non-GAAP financial measures are not consistent with GAAP because they do not reflect the deferral of revenue and product costs for recognition in later periods. These non-GAAP financial measures do not adjust for the costs associated with the Company’s intention to provide unspecified new features and software to purchasers of iPhone and Apple TV products. These costs are expensed as incurred under GAAP’s subscription accounting model, and are not adjusted in these non-GAAP financial measures. As such, these non-GAAP financial measures are not intended to reflect in a given period all of the costs of sales made in that period. Rather, the non-GAAP financial measures presented below are intended for the limited purpose of presenting performance measures that include the total sales, related product costs, and resulting income for iPhones and Apple TVs in the period those products are sold to customers.

Management believes investors will benefit from greater transparency in referring to these non-GAAP financial measures when assessing the Company’s operating results, as well as when forecasting and analyzing future periods. However, management recognizes that:

these non-GAAP financial measures are limited in their usefulness and should be considered only as a supplement to the Company’s GAAP financial measures;
these non-GAAP financial measures should not be considered in isolation from, or as a substitute for, the Company’s GAAP financial measures;
these non-GAAP financial measures should not be considered to be superior to the Company’s GAAP financial measures; and
these non-GAAP financial measures were not prepared in accordance with GAAP and investors should not assume that the non-GAAP financial measures presented in this earnings release were prepared under a comprehensive set of rules or principles.

Further, these non-GAAP financial measures may be unique to the Company, as they may be different from non-GAAP financial measures used by other companies. As such, this presentation of non-GAAP financial measures may not enhance the comparability of the Company’s results to the results of other companies.

A reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure or measures appears at the end of this press release.

This press release contains forward-looking statements including without limitation those about the Company’s estimated revenue and earnings per share. These statements involve risks and uncertainties, and actual results may differ. Risks and uncertainties include without limitation the effect of competitive and economic factors, and the Company’s reaction to those factors, on consumer and business buying decisions with respect to the Company’s products; continued competitive pressures in the marketplace; the ability of the Company to deliver to the marketplace and stimulate customer demand for new programs, products, and technological innovations on a timely basis; the effect that product transitions, changes in product pricing or mix, and/or increases in component costs could have on the Company’s gross margin; the inventory risk associated with the Company’s need to order or commit to order product components in advance of customer orders; the continued availability on acceptable terms, or at all, of certain components and services essential to the Company’s business currently obtained by the Company from sole or limited sources; the effect that the Company’s dependency on manufacturing and logistics services provided by third parties may have on the quality, quantity or cost of products manufactured or services rendered; the Company’s reliance on the availability of third-party digital content and applications; the potential impact of a finding that the Company has infringed on the intellectual property rights of others; the Company’s dependency on the performance of distributors and other resellers of the Company’s products; the effect that product and service quality problems could have on the Company’s sales and operating profits; the Company’s reliance on sole service providers for iPhone in certain countries; the continued service and availability of key executives and employees; war, terrorism, public health issues, and other circumstances that could disrupt supply, delivery, or demand of products; potential litigation from the matters investigated by the special committee of the board of directors and the restatement of the Company’s consolidated financial statements; and unfavorable results of other legal proceedings.

More information on potential factors that could affect the Company’s financial results is included from time to time in the Company’s public reports filed with the SEC, including the Company’s Form 10-K for the fiscal year ended September 27, 2008, its Forms 10-Q for the quarters ended December 27, 2008, March 28, 2009 and June 27, 2009, and its Form 10-K for the fiscal year ended September 26, 2009 to be filed with the SEC. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh. Today, Apple continues to lead the industry in innovation with its award-winning computers, OS X operating system and iLife and professional applications. Apple is also spearheading the digital media revolution with its iPod portable music and video players and iTunes online store, and has entered the mobile phone market with its revolutionary iPhone.

LENOVO REPORTS FOURTH QUARTER AND FULL-YEAR 2007/08 RESULTS

HONG KONG, May 22, 2008– Lenovo Group today reported results for its fourth fiscal quarter and full year ended March 31, 2008, driven by strong performance in all geographies and product segments. During the fourth quarter, Lenovo’s worldwide PC shipments grew 21 percent, well ahead of the industry average growth of approximately 15 percent.

As previously announced, Lenovo completed the sale of its mobile handset business in March 2008 in order to better focus on its core PC business. As a result, the Company recorded approximately US$65 million as a pre-tax gain on disposal. Taking into consideration the operating loss, the profit from the mobile handset business amounted to US$36 million and US$20 million in the fiscal fourth quarter and full year, respectively.

Consolidated sales for the quarter from continuing operations (excluding the mobile handset business) rose 13.5 percent year over year to US$3.7 billion. The Company’s gross profit margin for the fourth quarter reached 15.0 percent. Including the impact of restructuring, Lenovo reported pre-tax income of US$103 million from continuing operations. Including the net profit of US$36 million from discontinued operations, profit attributable to shareholders for the quarter grew 133 percent to US$140 million.

Basic earnings per share totaled 1.56 US cents, or 12.17 HK cents. Net cash reserves as of March 31, 2008, totaled US$1.6 billion. Lenovo’s board of directors has proposed a final dividend of 12.80 HK cents, or approximately 1.64 US cents per share.

“Lenovo continued to demonstrate strong execution of our strategies in the past quarter, achieving the eighth consecutive quarter of profitable growth,” said Lenovo Chairman Yang Yuanqing. “In the past three years since the acquisition, Lenovo has successfully achieved the financial targets which we set and accomplished numerous milestones. We have successfully assumed responsibility for our sales and customers, completed our brand transition, rolled out the transaction business outside of China, launched our consumer business, and released highly innovative products. Lenovo’s global competitiveness substantially increases with each of these solid steps and provides greater momentum for sustainable growth.

“Looking forward, Lenovo will continue to maintain our momentum in the relationship business and the Greater China region, while pursuing growth opportunities in the emerging markets, notebook markets and transaction business, specifically the consumer business, and actively fostering new business to maintain profitable growth that outpaces the industry.”

“Lenovo’s unique heritage has enabled us to implement one of the strategic foundations of this company – our worldsourcing business model,” said President and CEO William J. Amelio. “A complete approach to doing business in a new global economy, worldsourcing transcends boundaries, cultures and structures. It enables us to leverage our cultural and geographic strengths to manage costs, increase efficiency and harness the power of innovation from across the global organization.”

GEOGRAPHIC OVERVIEW

  • Lenovo Greater China posted US$1.29 billion in consolidated sales in the fourth fiscal quarter, up 18 percent, as the Company’s growth of 25 percent in PC shipments outpaced the industry average for the Greater China market. During the quarter, Lenovo further strengthened its number one market position on the strength of sales across product lines. The company’s Greater China business accounted for
    34 percent of total sales in the quarter.
  • The Americas accounted for US$1.0 billion in consolidated sales, or 27 percent of total sales. The quarter marked Lenovo’s fifth consecutive profitable quarter for the Americas, on the strength of desktop market share gains and overall PC demand in Canada. Lenovo also improved productivity in the region, cutting controllable expenses. Sales of notebooks in the U.S. were affected by a slowing economy, although Lenovo maintained its overall U.S. market share. Lenovo PC shipments in the Americas during the quarter increased 9 percent.
  • In the Europe, Middle East and Africa region (EMEA), shipments increased 30 percent in the fourth fiscal quarter. For the same period, consolidated sales totaled US$879 million, or 24 percent of total sales. Sales growth was spurred by demand for notebook computers, despite some weakening in consumer demand. 
  • Shipments for the Asia Pacific business (excluding Greater China) increased 18 percent in the fourth fiscal quarter. Consolidated sales in Asia Pacific totaled US$543 million in the fourth quarter, or 15 percent of total sales. Market share gains in Japan and volume gains in ASEAN, Australia and New Zealand were offset by investment in India.

PRODUCT OVERVIEW

  • Lenovo’s Notebook computers continued to be the largest contributor to total sales. Notebook shipments in the fourth fiscal quarter were up 38 percent year over year, and consolidated sales grew 22 percent to US$2.3 billion, or 61 percent of total sales for the quarter. Growth was driven by increased adoption of notebook PCs worldwide and an expanded portfolio of Lenovo products introduced to meet growing demand.
  • In the fourth fiscal quarter, Lenovo’s Desktop shipments rose 9 percent year over year. Consolidated sales increased 2 percent to US$1.4 billion in the quarter, or 38 percent of total sales. Performance was positively impacted by continued focus on operational efficiencies and introduction of competitive desktop PC offerings.

 

FULL YEAR RESULTS
For the 2007/08 fiscal year, consolidated sales from continuing operations (excluding the mobile handset business) increased 17 percent year over year to US$16.4 billion. Lenovo’s PC shipments grew 22 percent year over year, ahead of the estimated industry average of 16 percent. The Company’s gross profit margin for the fiscal year improved to 15.0 percent from 13.5 percent.

 

Including the impact of restructuring, pre-tax income for continuing operations surged 232 percent to US$512 million. Reflecting the impact of restructuring and the net profit of US$20 million from discontinued operations, full-year profit attributable to shareholders increased 201 percent year over year to US$484 million.

Basic earnings per share for the 2007/2008 fiscal year totaled 5.51 US cents, or 42.98 HK cents.

Dell Annouces Q1 Results: Dell Increases Revenue and Earnings, Lowers Operating Expenses

Dell Increases Revenue and Earnings, Lowers Operating Expenses
Company Gains Share in First Quarter Across All Major Product Categories and Regions

Round Rock, Texas, May 29, 2008

Dell today reported record fiscal first quarter revenue of $16 billion, a 9 percent year-over-year increase, and earnings of $0.38 cents per share, a 12 percent increase. The results were driven by better-than-industry growth of commercial and consumer products and services, and lower operating expense as a percent of revenue.

Product shipments in the quarter increased 22 percent, with servers growing three times the industry rate at 21 percent. Storage revenue increased 15 percent and enhanced services revenue was up 13 percent. Notebook unit growth, a Dell strategic priority, rose sharply at 43 percent and 1.2 times the industry growth rate. Consumer units grew at more than two times the industry rate and the company increased its global share by 1.2 points to 8.8 percent during the quarter.

“We are executing on all points of our strategy to drive growth in every product category and in every part of the world,” said Michael Dell, chairman and CEO. “These results are early signs of our progress against our five strategic priorities. Through a continued focus, we expect to continue growing faster than the industry and increase our revenue, profitability and cash flow for greater shareholder value.”

First Quarter (in millions, except share data) FY’09 FY’08 Change

Revenue $16,077 $14,722 9%
Operating Income $899 $933 (4%)
Net Income $784 $756 4%
EPS $0.38 $0.34 12%

References to Dell’s unit growth as a multiple of the growth of the industry exclude Dell, and all growth rates are year-over-year unless otherwise noted.

Earnings per share in the quarter were affected by the following items: $106 million in expense, or four cents per share, related to the realignment of our business, including severance costs and facility closures;
$26 million, or one cent per share, in amortization expense of purchased intangible assets;
$19 million in expense, or one cent per share, in investigation related costs;
A $42 million increase in financing and other income, or two cents per share, related to an error in currency exchange rates from prior periods;
A $46 million, or two cents per share, reversal in the provision for employee bonuses for fiscal 2008; and,
A reduction in a litigation reserve related to a favorable ruling in a patent case of $55 million, or two cents per share.

Dell’s headcount has been reduced by 7,000 in the past year – including a reduction of about 3,700 in the first quarter – or 8 percent before the impact of acquisitions. Dell has added about 2,700 employees through acquisitions, making the net reduction for the company about 5 percent.

Operating expenses were 12.9 percent of revenue for the quarter. Cash flow from operations was $143 million and impacted by lower payables and tax and bonus payments. The company still expects to generate cash flow from operations in excess of net income on an annualized basis. Dell ended the quarter with $9.8 billion in cash and investments and weighted average shares were 2.04 billion.

In the quarter, Dell issued $1.5 billion in private placement and medium- and long-term notes to be used for general corporate purposes. Dell spent more than $1 billion to repurchase 52 million shares of stock and plans to spend at least $1 billion on share repurchase in the second quarter.

Regional Highlights
Revenue from outside the United States during the quarter surpassed revenue from the U.S. for the first time. BRIC countries – Brazil, Russia, India and China – led accelerated growth in emerging countries with 73 percent year-over-year increase in shipments and 58 percent increase in revenue, and accounted for almost 9 percent of Dell’s total revenue. Asia-Pacific and Japan Commercial (APJ): Revenue in the quarter grew by 19 percent on a 31 percent increase in units. Operating income was up 52 percent on a balanced country, segment and product performance. India and China led the region with revenue increases of 52 percent and 30 percent, and unit shipment growth of 68 percent and 43 percent, respectively. APJ growth continued strong across all product categories, with shipment increases of 46 percent in notebooks, 23 percent in server shipments and 25 percent in desktops.

Americas Commercial: Total unit growth was up 3 percent driven by an 11 percent increase in notebooks and a 20 percent increase in servers, which was more than four times the rate of the industry.

Europe, Middle East and Africa Commercial (EMEA): Revenue increased 15 percent and shipments were up 30 percent, with a 59 percent increase in shipments of notebooks. Storage revenue increased 48 percent. Unit growth in the region was led by the largest countries: United Kingdom up 20 percent; Germany up 26 percent and France up 14 percent.

Strategic Priority Highlights Global Consumer: On improved profitability, revenue grew 20 percent driven by a 47 percent increase in shipments. Dell grew units at more than two times the rate of the industry and increased its global share by 1.2 points to 8.8 percent. In addition to its online and telephone sales channels, Dell expanded its global retail presence, adding Suning in China and Costco in the U.S. to reach more than 13,000 retail locations worldwide.

Enterprise: Server revenues were up 4 percent on a 21 percent increase in units, Dell’s fastest unit growth in more than two years and three times the rate of the industry. The company gained 1.5 points of share in the quarter. Storage revenue jumped 15 percent driven by strong growth from Dell’s PowerVault direct attached products and a full quarter of EqualLogic offerings. Based on company estimates, Dell again took share worldwide in the first quarter. Enhanced services revenue was up 13 percent aided by the first full quarter of the new ProSupport solutions. A leading indicator of services growth – the deferred services revenue balance – grew 23 percent to $5.4 billion. Dell’s Cloud-Computing service and design model is powering about half of the fastest growing Chinese internet companies as well as the largest portal in China. With launch of the Dell EqualLogic PS5000 series IP SANs and the Dell/EMC AX4 and 5i SANs, Dell extended its position as the No. 1 provider worldwide of iSCSI SAN solutions.

Notebooks: Notebook units grew 43 percent year-over-year with revenue growth of 22 percent. In the quarter, Dell released its first fully ruggedized laptop, the Latitude XFR D630. In Global Consumer, notebook units increased 78 percent and made up 60 percent of the product mix.
Small and Medium Business: Dell announced a redesigned Vostro laptop line for small businesses, including the 13.3-inch Vostro 1310 and the 15.4 inch Vostro 1510. These products are further expansion of Dell’s products designed specifically for small business customers, including servers, storage and services.

Emerging Countries: BRIC plus the 10 targeted countries in Dell’s emerging countries priority accelerated revenue 47 percent. The company launched the Dell 500 notebook, designed specifically for the needs of emerging countries, which it is shipping to great demand in China and India. The Partner Direct program was launched in Europe and APJ in the quarter.

Company Outlook
Dell will continue to incur costs as it realigns its business to improve competitiveness, reduce headcount and invest in infrastructure and acquisitions. The company is seeing conservatism in IT spending in the U.S. particularly with its global and large customers as well as public, small and medium business accounts. Dell expects the conservatism to continue through the summer, particularly as many of these customer segments are seasonally slower. Dell does not expect the significant component-cost reductions experienced during the first half of last year. In addition, the company also expects to have lower investment and other income driven by reduced investment balances with lower interest rates and increased interest expense driven by a higher level of debt.

Dell expects to continue to benefit from improving performance in areas like emerging countries, notebooks, enterprise and services, which collectively are driving a more diversified portfolio of geographies and products.

Against this backdrop, the company recently shared its goal to lower total cost and is targeting $3 billion in annualized savings by fiscal 2011. Dell’s focus remains on growing units faster than the industry, increasing revenue, profitability and cash flow, and making decisions that deliver the best long-term result.

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