Nokia second quarter profit falls 40 percent to $290 million

HELSINKI -- Nokia Corp. said Thursday that second-quarter net profit fell 40 percent to 227 million euros ($290 million) as the world's largest mobile phone maker lost market share and sales remained flat. Analysts, however, noted its sales of smart phones were better than expected.

The profit was down from a net profit of 380 million euros in the same period last year, the company said. Revenue grew a mere 1 percent in the period to 10 billion euros from 9.9 billion euros a year earlier.

Nokia's overall market share fell to 33 percent in the quarter 2010, down from 35 percent a year earlier. But it said market share in the smart phone sector remained at 41 percent -- unchanged from the previous year and the first quarter of 2010, despite strong competition from iPhone-maker Apple Inc., and Research in Motion Ltd., which makes BlackBerry handsets.

"Nokia managed to hold onto that market," said Neil Mawston, analyst at London-Based Strategy Analytics. "They actually sold 24 million smart phones, more than our forecasts, and that's what maybe is helping to support the shares a little bit."

Nokia shares were trading up more than 4 percent at 7.27 euros ($9.32).

The company repeated its prediction that the global mobile market will grow 10 percent this year while its own growth would remain flat. Nokia said it sold 111 million handsets in the quarter, up 8 percent on 2009.

The company remains the leader in the global mobile market, selling 432 million devices last year, more than its three closest rivals combined, but competition in the smart phone sector was seen as being too much for the former industry bellwether.

Now, Mawston says, those rivals may be feeling some pressure as well.

"The challenges are no longer unique to Nokia -- they're impacting other players in the market ... Blackberry and Apple are also under a little bit of pressure," Mawston said. "Despite the iPhone attack, maybe Nokia isn't doing quite as badly as everyone thought."