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From DealingFloor: Nokia is losing 5% in European markets on pricing-power worries after releasing these figures:

FOURTH QUARTER 2005 HIGHLIGHTS

- Mobile industry quarterly device volumes 244 million units, up 23%
sequentially and 25% year on year
- Nokia quarterly device volumes 84 million units, up 26% sequentially and 27%
year on year
- Nokia fourth quarter device market share 34%, up 1% sequentially and flat year
on year
- Nokia clear #1 in Europe, Asia-Pacific, China, and Middle East & Africa
- Nokia bought back 121 million shares (315 million shares bought back in total
in 2005)

INDUSTRY AND NOKIA OUTLOOK FOR THE FIRST QUARTER 2006

Nokia expects overall mobile device market volumes in the first quarter 2006 to
reflect normal industry seasonality following a strong fourth quarter selling
period. We expect our own share of the device market in the first quarter to be
flat to slightly up sequentially, and up year on year. We also expect Nokia
device average selling prices (ASPs) in the first quarter to be flat to slightly
down sequentially, driven by a regional mix shift. Sales in our Networks
business are expected to experience a seasonal decline in the first quarter, but
be up year on year.

OUTLOOK FOR THE FULL YEAR 2006

Nokia expects the mobile device market volume to grow more than 10% in 2006,
from our preliminary estimate of approximately 795 million units in 2005. We
also expect the device industry to experience value growth in 2006, but expect
some decline in industry ASPs, primarily reflecting the increasing impact of the
emerging markets. Nokia expects moderate growth in the mobile infrastructure
market in euro terms in 2006. Nokia’s goal is to increase its market share both
in mobile devices and the infrastructure market, in order to build on its
industry leading position. [Source: Nokia press release]

The Wall St. Journal adds:

the networks arm remained a drag on earnings, posting a 12% drop in operating profit. The enterprise unit missed analysts' expectations, reporting a €136 million operating loss, compared with a loss of €44 million in the year-earlier period.

With much of the growth in new mobile users coming from China, India and countries in Africa, and with greater success than rivals at the low end of the market, Nokia continues to suffer from falling prices. Nokia sold 84 million phones in the quarter, but prices fell faster than expected, putting more pressure on margins.

The average selling price, or ASP, for mobile devices fell to €99 in the period from €111. This was "primarily driven by a mix shift in our volumes to markets where low end models predominate," Nokia said. The company predicts the ASP in the first quarter will be flat to slightly down, sequentially.


NOK 1-yr chart:

Source: Nokia Reports Inline, But Worries Over Margins (NOK)