Nokia Profits Nosedive

Nonetheless, Nokia CEO Olli-Pekka Kallasvuo said the company can look forward to growth. "In what has been an exceptionally tough environment, we continue to invest in a focused manner in consumer Internet services delivered across our broad portfolio of mobile devices. Combined, these solutions will drive our future growth," Kallasvuo said in a statement. "Regarding the health of the overall mobile device market, the inventory already in the sales channels decreased substantially during Q1 due to extensive destocking by operators and distributors. This adversely impacted our sales volumes in the quarter."

According to the Finnish device maker, net profits plummeted to 122 million euros, or roughly $161 million, in the first quarter, from profits of 1.22 billion euros one year ago. That massive drop fell well below analyst expectations, which had Nokia reporting 306 million euros in profit.

The big profit loss stems from weak sales, which dropped from 12.66 billion euro last year to 9.3 billion euros ($12.2 billion) in the first quarter, down 27 percent year over year and sequentially. Poor sales resulted in Nokia shipping 93.2 million handsets during the first quarter, a 19 percent drop from the year before and 18 percent fewer compared to the previous quarter.

Along with a massive dip in profits, Nokia said its overall mobile device market share dropped from 39 percent to 37 percent, likely because of increasing device sales from Nokia's chief rivals the Apple iPhone and Research In Motion (RIM) Ltd.'s BlackBerry smartphone line.

Looking ahead, Nokia said it expects overall industry sales to drop at least 10 percent for 2009 compared to last year with sales in the second quarter staying essentially flat.

The recent decline in sales and profits comes on the heels of Nokia slashing 1,700 global jobs, roughly one percent of its worldwide workforce, in its bid to cut costs by $910 million, That cost-cutting initiative started in earnest in January, when Nokia reported that fourth-quarter income fell to $745 million from $2.4 billion in the same period one year prior.