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Nokia's profits in rapid decline as industry warns of bad year

NOKIA Oyj, the world's biggest mobile-phone maker, reported a steeper decline in fourth-quarter profit than analysts estimated and said industry sales may drop as much as 10 percent this year.

Net income fell to 576 million euros (US$749 billion), or 15 cents a share, from 1.84 billion, or 47 cents, a year earlier, the company said yesterday in a statement. Revenue slumped 20 percent to 12.7 billion euros. Analysts had estimated profit of 975 million euros on sales of 13.1 billion euros, Bloomberg News reported.

Nokia sold 15 percent fewer phones in the quarter than a year earlier and cut its industry sales forecast for a third time since last quarter. The company previously predicted a 5-percent drop or more.

Nokia plans to preserve cash by cutting costs and its dividend as the global economic slump has made consumers more hesitant to replace phones.

Fast deterioration

"In recent weeks, the macroeconomic environment has deteriorated rapidly, with even weaker consumer confidence, unprecedented currency volatility and credit tightness continuing to impact the mobile communications industry," Chief Executive Officer Olli-Pekka Kallasvuo said. "We are taking action to reduce overall costs."

The Finland-based company proposed slashing its 2008 dividend to 40 euro cents from 53 cents the previous year.

Nokia fell as much as 7.4 percent to 9.47 euros in Helsinki trading. The stock dropped 58 percent last year, its worst annual performance since at least 1992.

Nokia said profitability at its main devices and services unit would be lower in the first half. It forecast an operating margin of more than 10 percent in the first half and between 13 percent and 19 percent in the second half. It had previously predicted the margin would be in the teens for the entire year.

The company aims to reduce costs by more than 700 million euros by the end of 2010. Nokia said its global market share fell to 37 percent in the fourth quarter from 40 percent a year earlier.



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