Nokia Posts 66% Drop In 2Q ProfitsNokia Posts 66% Drop In 2Q Profits

The global economic recession continues to sap consumer demand for new phones, and Nokia was hit by this as it reported a 66% dip in second-quarter profits.

The world's largest cell phone maker said its profits were about $535 million for the quarter, compared to profits of about $1.5 billion for the same period last year. The company shipped 103 million mobile devices during the period, but it saw the average selling price per phone drop.

The company saw its global market share hit 38%, which is a slight increase from the first quarter but a 2% decline from the same period last year. Nokia stuck to its prediction that the mobile market will fall about 10% in 2009, but it expects its market share to remain unchanged from 2008.

"Nokia put in a solid performance in what was another tough quarter," said CEO Olli-Pekka Kallasvuo in a statement. "We are balancing short-term priorities with our longer-term growth ambitions as elements of the mobile handset, PC, Internet and media industries converge to form a new industry. Consumers will increasingly expect devices and services designed as integrated solutions. To capture this opportunity, we are accelerating our strategic transformation into a solutions company."

Nokia released its flagship handset during the quarter, and the N97 was the first device to ship with the company's over-the-air app store preloaded on it. Packed with multiple high-end features such as Wi-Fi, 3G, Bluetooth, and an FM transmitter, the N97 has been met with mixed reviews primarily due to its user interface.

While it is the global leader in cell phones and smartphones, Nokia has a lower profile in the United States than rivals such as Apple's iPhone and Research In Motion's BlackBerry smartphones. Nokia shipped 3.2 million devices in North America for the quarter, but it is placing an increased emphasis on the U.S. market and it is striking more deals with carriers to bring out subsidized handsets like the upcoming Surge.

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