Maybe it's time for me to sell my Nokia
No, not because of its first-quarter earnings report. Wall Street may not like the results -- net income fell short of projections -- but I see plenty worth admiring. Revenue was up 28%. Per-share profit excluding special items improved 46%.
How did it happen? Big sales of more profitable gadgets. Gross profit for the devices division -- investor-speak for "the group that sells the geekery you carry with you" -- improved 33%. Operating profit was up 50%. Group gross and operating margins improved by more than five percentage points each.
Even more impressive: All of this was achieved as Nokia's average selling price fell to 79 euro from 89 euro in last year's Q1. (And 83 euro in Q4.)
Too bad this pleasant past can't also be prologue. Executives revised 2008 projections to show a decline in the overall value of the mobile market in euro terms. Quoting from a company statement:
The change from our previous estimate of value growth for this market primarily reflects the negative impact of the recently weakened U.S. dollar, the general economic slowdown in the U.S., and possibly going forward some economic slowdown in Europe. [Emphasis added.]
Fair enough. But recessions have been, historically, short-term events. Selling because of one smacks of panic. So why am I even thinking of doing it? Troubling comments from the CEO.
Nokia chief Olli-Pekka Kallasvuo, when asked this morning on CNBC about the threat of Apple
A niche product? Really, sir. Apple may have only recently begun selling the iPhone in Europe, but here the device now trails only Research In Motion
And remember: Apple is working on a broad business update to its device that should make it more attractive to corporate users. A 3G version is reportedly in development. And China Mobile
A niche product? I suppose it's possible to say that about anything Apple sells. Microsoft
I'd rather sell than watch something similar happen to Nokia, sir.
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