Nokia, the world’s largest mobile phone manufacturer, has fallen victim to its own success in emerging markets as strong sales of cheap handsets have undermined its profitability significantly.
Nokia’s third-quarter phone
sales rose more than expected on Thursday, the company said
. But it cut prices sharply to win market share,
squeezing its margins and taking over 5 per cent off its shares.
Thursday’s results come in sharp contrast to its smaller rival, Sony Ericsson, whose strong performance helped Ericsson, the world’s largest telecoms equipment company, report its first quarterly net profit growth this year
Sony Ericsson, a joint venture between the Japanese firm and the Swedish firm, last week reported nearly tripled pre-tax profits thanks to its popular high-end mobile and music phones.
Nokia, which controls 36 per cent of the world’s mobile phone market, said the sharp decline in prices was due to stronger than expected demand in entry-level phones. Soft demand for third generation mobile phones also contributed to the price drop.
Nokia sold 65.9 per cent more handsets in Asia Pacific in the third quarter than a year ago. Unit sales were up 62.4 per cent in China, 34.3 per cent in the Middle East and Africa and 11.2 per cent in Europe.
Ericsson, meanwhile, expected a strong fourth quarter due to seasonality effect, and moderate growth in its key mobile infrastructure business next year on the back of rising demand for data services globally.