The mobile phone market has practically collapsed. Nokia reported on Thursday a 90 per cent drop in first-quarter net profits as the global economic crisis takes its toll on demand for cellphones.
Nokia posted first quarter operating profits of a slim 55€ ($73 million), down from 1.5 billion just 12 months earlier. Net sales have also dropped a sharp 27 per cent year-on-year.
“The lower sales volumes for Nokia and the industry, both year on year and sequentially, were primarily driven by the negative impact of the rapidly deteriorating global economic conditions, including weaker consumer and corporate spending, severely constrained credit availability and unprecedented currency market volatility,” Nokia said in a press release.
Olli-Pekka Kallasvuo, the chief executive, said: “In what has been an exceptionally tough environment, we continue to invest in a focused manner in consumer internet services delivered across our broad portfolio of mobile devices.”
Nokia, once the big name in the cell phone market has recently lost out market share to competitors like Apple’s iPhone, Research in Motion’s BlackBerry and new phones based on Google’s new mobile phone operating system.
Last month it announced 1,700 layoffs worldwide. Shares are up 7.6%. The future remains uncertain not only for Nokia but for the cellphone market in general as consumer reign in on spending.
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