19th Apr 2012 11:00
Nokia / Half-yearly Results 19.04.2012 12:00 Dissemination of a UK Regulatory Announcement, transmitted byDGAP - a company of EquityStory AG.The issuer is solely responsible for the content of this announcement.--------------------------------------------------------------------------- Nokia CorporationInterim reportApril 19, 2012 at 13.00 (CET+1) This is a summary of the first quarter 2012 interim report published today. Thecomplete first quarter 2012 interim report with tables is available athttp://www.nokia.com/results/Nokia_results2012Q1e.pdf. Investors should notrely on summaries of our interim reports only, but should review the completeinterim reports with tables. FINANCIAL AND OPERATING HIGHLIGHTS - Q1 2012 net sales of EUR 7.4 billion (Q1 2011: EUR 10.4 billion) - Non-IFRS EPS of EUR -0.08 and reported EPS of EUR -0.25 - Losses incurred due to greater than expected competitive challenges andseasonality; reported losses also primarily driven by charges related torestructuring activities - Implementation of smartphone strategy proceeding:- Expansion of Lumia portfolio to cover higher and lower price points (Lumia900 and Lumia 610 announced in Q1) - Expansion of geographic coverage to 45 countries currently (31 new countriesin Q1) - Encouraging launch of Lumia 900 with AT&T in US in April - Renewing feature phone portfolio with 7 new Asha products ramping up - Taking action to drive improvements in the trajectory of Lumia sales and tosupport feature phone sales - Plans to accelerate and substantially deepen Devices & Services cost savings,consistent with strategic focus. Nokia will share further details as quickly aspossible. - Balance sheet remains strong with EUR 9.8 billion of gross cash at end-Q1;EUR 4.9 billion of net cash at end-Q1 - Estimates that current annual IPR royalty income run-rate is approximatelyEUR 0.5 billion Commenting on the Q1 results, Stephen Elop, Nokia CEO, said: 'We are navigatingthrough a significant company transition in an industry environment thatcontinues to evolve and shift quickly. Over the last year we have made progresson our new strategy, but we have faced greater than expected competitivechallenges. We have launched four Lumia devices ahead of schedule to encouraging awards andpopular acclaim. The actual sales results have been mixed. We exceededexpectations in markets including the United States, but establishing momentumin certain markets including the UK has been more challenging. At the same time, the lower price tiers of our industry are undergoing astructural change, and traditional feature phones are challenged by full touchdevices. As a result we are taking deliberate measures to continue to renew ourSeries 40 platform, and we plan to strengthen our line-up in Q2 2012. We aremaking investments in our Mobile Phones business unit aimed at addressing thegaps in our offering. We have a clear sense of urgency to move our strategy forward even faster. Weare pursuing step function changes by having launched the Lumia 610 and Lumia900 in the first quarter, expanding market coverage, increasing advertising,introducing key customer-requested features and broadening our most successfulgo-to-market activities. At the same time, we have focused our efforts in thelow-end of smartphones and feature phone asset to drive improved businessresults and conserve cash. We are confident in our strategy and focused on responding urgently in theshort term and creating value for our shareholders in the long term.' SUMMARY FINANCIAL INFORMATION The following table sets forth selective line items for the periods indicated,as well as the year-on-year and sequential growth rates. ------------------- Reported and Non-IFRS first quarter 2012 results1,2 ----------------------------------------------------EUR million Q1/2012 Q1/2011 YoY Q4/2011 QoQ Change Change----------------------------------------------------------------------------------------------------------------------------------------------Nokia Net sales 7 354 10 399 -29% 10 005 -26%Operating profit -1 340 439 -954 Operating profit -260 704 478 (non-IFRS) EPS, EUR diluted -0.25 0.09 -0.29 EPS, EUR diluted -0.08 0.13 0.06 (non-IFRS)3 Net cash from -590 -173 634 operating activities Net cash and 4 872 6 372 -24% 5 581 -13%other liquid assets4 ----------------------------------------------------------------------------------------------------------------------------------------------Devices & Services5 Net sales 4 246 7 087 -40% 5 997 -29%Smart Devices 1 704 3 528 -52% 2 747 -38%net sales Mobile Phones 2 311 3 407 -32% 3 040 -24%net sales Mobile device 82.7 108.5 -24% 113.5 -27%volume (mn units) Smart Devices 11.9 24.2 -51% 19.6 -39%volume (mn units) Mobile Phones 70.8 84.3 -16% 93.9 -25%volume (mn units) Mobile device 51 65 -22% 53 -4%ASP6 Smart Devices 143 146 -2% 140 2%ASP6 Mobile Phones 33 40 -18% 32 3%ASP6 Operating -219 729 203 profit Operating -127 733 292 profit (non-IFRS) Operating -5.2% 10.3% 3.4% margin % Operating margin % -3.0% 10.3% 4.9% (non-IFRS) ----------------------------------------------------------------------------------------------------------------------------------------------Location & Commerce5 Net sales 277 232 19% 306 -9%Operating profit -94 -132 -1 205 Operating profit 36 -16 29 24%(non-IFRS) Operating -33.9% -56.9% -393.8% margin % Operating 12.9% -6.9% 9.5% margin % (non-IFRS) ----------------------------------------------------------------------------------------------------------------------------------------------Nokia Siemens Networks5,7 Net sales 2 947 3 171 -7% 3 815 -23%Operating profit -1 005 -142 67 Operating profit -147 3 176 (non-IFRS) Operating -34.1% -4.5% 1.8% margin % Operating -5.0% 0.1% 4.6% margin % (non-IFRS) ----------------------------------------------------------------------- Note 1 relating to non-IFRS results: Non-IFRS results exclude special items forall periods. In addition, non-IFRS results exclude intangible assetamortization, other purchase price accounting related items and inventory valueadjustments arising from (i) the formation of Nokia Siemens Networks and (ii)all business acquisitions completed after June 30, 2008. More specificinformation about the exclusions from the non-IFRS results can be found in note2 below and for Q1 2012 and Q1 2011 in our complete Q1 2012 interim report withtables on pages 20-22 and 24, and for Q4 2011 in our complete Q4 and full year2011 report with tables on pages 4-5, 20-22 and 24 published on January 26,2012. Nokia believes that these non-IFRS financial measures provide meaningfulsupplemental information to both management and investors regarding Nokia'sperformance by excluding the above-described items that may not be indicativeof Nokia's business operating results. These non-IFRS financial measures shouldnot be viewed in isolation or as substitutes to the equivalent IFRS measure(s),but should be used in conjunction with the most directly comparable IFRSmeasure(s) in the reported results. A reconciliation of our Q1 2012 and Q1 2011non-IFRS results to our reported results can be found in our complete Q1 2012interim report with tables on pages 18 and 20-24. A reconciliation of our Q42011 non-IFRS results to our reported results can be found in our complete Q4and full year 2011 report with tables on pages 17 and 20-24 published onJanuary 26, 2012. Note 2 relating to non-IFRS exclusions: Q1 2012 - EUR 1 080 million consisting of:- EUR 772 million restructuring charge and other associated items in NokiaSiemens Networks - EUR 10 million restructuring charge in Location & Commerce- EUR 91 million restructuring charge in Devices & Services- EUR 86 million of intangible asset amortization and other purchase priceaccounting related items arising from the formation of Nokia Siemens Networksand the acquisition of Motorola Solutions' networks assets - EUR 120 million of intangible asset amortization and other purchase priceaccounting related items arising from the acquisition of NAVTEQ - EUR 1 million of intangible assets amortization and other purchase pricerelated items arising from the acquisition of Novarra, MetaCarta and Motally inDevices & Services Q1 2012 taxes - EUR 135 million valuation allowance for Nokia Siemens Networksdeferred tax assets impacting Nokia taxes. Q1 2011 - EUR 265 million consisting of:- EUR 28 million restructuring charge and other associated items in NokiaSiemens Networks - EUR 117 million of intangible asset amortization and other purchase priceaccounting related items arising from the formation of Nokia Siemens Networks - EUR 116 million of intangible asset amortization and other purchase priceaccounting related items arising from the acquisition of NAVTEQ - EUR 4 million of intangible assets amortization and other purchase pricerelated items arising from the acquisition of OZ Communications, Novarra,MetaCarta and Motally in Devices & Services Q4 2011 - EUR 1 432 million (net) consisting of:- EUR 1 090 million partial impairment of goodwill in Location & Commerce- EUR 25 million restructuring charge in Location & Commerce- EUR 119 million of intangible asset amortization and other purchase priceaccounting related items arising from the acquisition of NAVTEQ - EUR 100 million restructuring charge and EUR 36 million associatedimpairments in Devices & Services - EUR 2 million of intangible assets amortization and other purchase pricerelated items arising from the acquisition of Novarra, MetaCarta and Motally inDevices & Services - EUR 86 million of intangible asset amortization and other purchase priceaccounting related items arising from the formation of Nokia Siemens Networksand the acquisition of Motorola Solutions' networks assets - EUR 23 million restructuring charge and other associated items in NokiaSiemens Networks - EUR 49 million positive item from a cartel claim settlement Note 3 relating to non-IFRS Nokia EPS: Nokia taxes continued to be unfavorablyimpacted by Nokia Siemens Networks taxes as no tax benefits are recognized forcertain Nokia Siemens Networks deferred tax items. In Q1 2012, one-quarter taxexpenses in Devices & Services also had an unfavorable impact. If Nokia'sestimated long-term tax rate of 26% had been applied, non-IFRS Nokia EPS wouldhave been approximately 2.1 Euro cents higher in Q1 2012. Note 4 relating to Nokia net cash and other liquid assets: Calculated as totalcash and other liquid assets less interest-bearing liabilities. Note 5 relating to operational and reporting structure: We adopted our currentoperational structure during 2011 and have three businesses: Devices &Services, Location & Commerce and Nokia Siemens Networks and four operating andreportable segments: Smart Devices and Mobile Phones within Devices & Services,Location & Commerce and Nokia Siemens Networks. Smart Devices focuses onsmartphones and Mobile Phones focuses on mass market feature phones. Devices &Services also contains Devices & Services Other which includes net sales of ourluxury phone business Vertu, spare parts and related cost of sales andoperating expenses, as well as intellectual property related royalty income andcommon research and development expenses. Location & Commerce focuses on thedevelopment of location-based services and local commerce. Nokia SiemensNetworks is one of the leading global providers of telecommunicationsinfrastructure hardware, software and services. Note 6 relating to average selling prices (ASP): Mobile device ASP representstotal Devices & Services net sales (Smart Devices net sales, Mobile Phones netsales, and Devices & Services Other net sales) divided by total Devices &Services volumes. Devices & Services Other net sales includes net sales ofNokia's luxury phone business Vertu and spare parts, as well as intellectualproperty royalty income. Smart Devices ASP represents Smart Devices net salesdivided by Smart Devices volumes. Mobile Phones ASP represents Mobile Phonesnet sales divided by Mobile Phones volumes. Note 7 relating to Nokia Siemens Networks: Nokia Siemens Networks completed theacquisition of Motorola Solutions' networks assets on April 30, 2011.Accordingly, the results of Nokia Siemens Networks for the first quarter 2012are not directly comparable to its results for the first quarter 2011. NOKIA OUTLOOK - Nokia expects its non-IFRS Devices & Services operating margin in the secondquarter 2012 to be similar to or below the first quarter 2012 level of negative3.0%. This outlook reflects that the first quarter 2012 benefit related tolower warranty costs is expected to be non-recurring, as well as expectationsregarding a number of factors including: - competitive industry dynamics continuing to negatively affect the SmartDevices and Mobile Phones business units; - timing, ramp-up, and consumer demand related to new products; and- the macroeconomic environment. - Nokia continues to target to reduce Devices & Services non-IFRS operatingexpenses by more than EUR 1 billion for the full year 2013, compared to thefull year 2010 Devices & Services non-IFRS operating expenses of EUR 5.35billion. Nokia plans to accelerate and substantially deepen Devices & Servicescost savings, consistent with its strategic focus. Nokia will share furtherdetails as quickly as possible. - Nokia and Nokia Siemens Networks expect Nokia Siemens Networks non-IFRSoperating margin to clearly improve in the second quarter 2012 compared to thefirst quarter 2012 level of negative 5.0%. Due to the nature of therestructuring program as well as prevailing uncertain macroeconomic conditions,the timing of improvements in profitability is uncertain and therefore NokiaSiemens Networks' non-IFRS operating margin in 2012 is expected to be volatile. - Nokia Siemens Networks continues to target to reduce its non-IFRS annualizedoperating expenses and production overheads by EUR 1 billion by the end of2013, compared to the end of 2011. FIRST QUARTER 2012 FINANCIAL AND OPERATING DISCUSSION NOKIA GROUP We adopted our current operational structure during 2011 and have threebusinesses: Devices & Services, Location & Commerce and Nokia Siemens Networksand four operating and reportable segments: Smart Devices and Mobile Phoneswithin Devices & Services, Location & Commerce and Nokia Siemens Networks.Smart Devices focuses on smartphones and Mobile Phones focuses on mass marketfeature phones. Devices & Services also contains Devices & Services Other whichincludes net sales of our luxury phone business Vertu, spare parts and relatedcost of sales and operating expenses, as well as intellectual property relatedroyalty income and common research and development expenses. Location &Commerce focuses on the development of location-based services and localcommerce. Nokia Siemens Networks is one of the leading global providers oftelecommunications infrastructure hardware, software and services. The following discussion includes non-IFRS results information. Non-IFRSresults exclude special items for all periods. In addition, non-IFRS resultsexclude intangible asset amortization, other purchase price accounting relateditems and inventory value adjustments arising from (i) the formation of NokiaSiemens Networks and (ii) all business acquisitions completed after June 30,2008. The following table sets forth the year-on-year and sequential growth rates inour net sales on a reported basis and at constant currency for the periodsindicated. ----------------------------------------------------------------------FIRST QUARTER 2012 NET SALES, REPORTED & CONSTANT CURRENCY1 YoY QoQ Change Change---------------------------------------------------------------------Group net sales - reported -29% -26%---------------------------------------------------------------------Group net sales - constant currency1 -29% -28%---------------------------------------------------------------------Devices & Services net sales - reported -40% -29%---------------------------------------------------------------------Devices & Services net sales - constant currency1 -38% -30%---------------------------------------------------------------------Nokia Siemens Networks net sales - reported -7% -23%---------------------------------------------------------------------Nokia Siemens Networks net sales - constant currency1 -9% -24%--------------------------------------------------------------------- Note 1: Change in net sales at constant currency excludes the impact of changesin exchange rates in comparison to the Euro, our reporting currency. The following table sets forth Nokia Group's reported cash flow for the periodsindicated and financial position at the end of the periods indicated, as wellas the year-on-year and sequential growth rates. NOKIA GROUP CASH FLOW AND FINANCIAL POSITION --------------------------------------------------------------------------------- EUR million Q1/2012 Q1/2011 YoY Q4/2011 QoQ Change Change --------------------------------------------------------------------------------Net cash from operating -590 -173 634 activities --------------------------------------------------------------------------------Total cash and other liquid 9 793 11 056 -11% 10 902 -10% assets --------------------------------------------------------------------------------Net cash and other liquid 4 872 6 372 -24% 5 581 -13% assets1 -------------------------------------------------------------------------------- Note 1: Total cash and other liquid assets minus interest-bearing liabilities. Year-on-year, net cash and other liquid assets decreased by EUR 1.5 billionprimarily due to payment of the dividend, cash outflows related to theacquisition of Motorola Solutions' networks assets and capital expenditures,partially offset by a EUR 500 million equity investment in Nokia SiemensNetworks by Siemens, the receipt of quarterly platform support payments fromMicrosoft and positive overall net cash from operating activities. Sequentially, net cash and other liquid assets decreased by EUR 0.7 billionprimarily due to unfavorable and mostly non-recurring net working capitalchanges in Devices & Services as well as operating losses, capital expenditureand cash outflows related to restructuring, partially offset by a positivecontribution from Nokia Siemens Networks and the receipt of a quarterlyplatform support payment from Microsoft. Sequentially, Devices & Services net working capital changes in the firstquarter 2012 had a negative impact on net cash and other liquid assets. Theworking capital change was primarily due to accounts payable balances decliningmore than the combined declines in accounts receivable and inventory balances.The end-of-quarter days of sales outstanding was higher sequentially resultingfrom a lower proportion of net sales in regions with faster payment terms,including India and China. The end-of-quarter days of sales in inventory washigher sequentially resulting from the ramp-up of Lumia devices. Unless thereare similar fluctuations in the composition of Devices & Services net sales andinventory, we expect the unfavorable impact of Devices & Services workingcapital changes in the first quarter 2012 to be mostly non-recurring. We arefocused on improving Devices & Services working capital performance, and we seeopportunities to improve inventory, accounts payable and accounts receivablemanagement over the remainder of 2012. In the first quarter 2012, Nokia Siemens Networks' contribution to net cashfrom operating activities was approximately EUR 410 million. This was primarilydriven by working capital improvements, partially offset by operating losses. In the first quarter 2012, Nokia Siemens Networks' working capital performanceimproved by approximately EUR 540 million, primarily related to significantlyimproved accounts receivables collection as well as higher advanced paymentsfrom customers. Our agreement with Microsoft includes platform support payments from Microsoftto us as well as software royalty payments from us to Microsoft. In the firstquarter 2012, we received a quarterly platform support payment of USD 250million (approximately EUR 189 million). We have a competitive softwareroyalty structure, which includes minimum software royalty commitments. Overthe life of the agreement, both the platform support payments and the minimumsoftware royalty commitments are expected to measure in the billions of USDollars. The total amount of the platform support payments is expected toslightly exceed the total amount of the minimum software royalty commitments. DEVICES & SERVICES The following table sets forth a summary of the results for our Devices &Services business for the periods indicated, as well as the year-on-year andsequential growth rates. DEVICES & SERVICES RESULTS SUMMARY --------------------------------------------------------------------------------- Q1/201 Q1/201 YoY Q4/201 QoQ 2 1 Change 1 Change--------------------------------------------------------------------------------Net sales (EUR million)1 4 246 7 087 -40% 5 997 -29%--------------------------------------------------------------------------------Mobile device volume (million 82.7 108.5 -24% 113.5 -27% units) --------------------------------------------------------------------------------Mobile device ASP (EUR) 51 65 -22% 53 -4%--------------------------------------------------------------------------------Non-IFRS gross margin (%) 24.4% 28.8% 25.8% --------------------------------------------------------------------------------Non-IFRS operating expenses (EUR 1 123 1 322 -15% 1 262 -11% million) --------------------------------------------------------------------------------Non-IFRS operating margin (%) -3.0% 10.3% 4.9% -------------------------------------------------------------------------------- Note 1: Includes IPR royalty income recognized in Devices & Services Other netsales. Net SalesThe year-on-year and sequential decline in our Devices & Services net sales arediscussed below under our Smart Devices and Mobile Phones business units. Weestimate that our current annual IPR royalty income run-rate is approximatelyEUR 0.5 billion. At constant currency, Devices & Services net sales would havedecreased 38% year-on-year and 30% sequentially. The following table sets forth the net sales for our Devices & Servicesbusiness for the periods indicated, as well as the year-on-year and sequentialgrowth rates, by geographic area. IPR royalty income is allocated to thegeographic areas contained in this chart. DEVICES & SERVICES NET SALES BY GEOGRAPHIC AREA ------------------------------------------------------------------------EUR million Q1/2012 Q1/2011 YoY Change Q4/2011 QoQ Change----------------------------------------------------------------------------------------------------------------------------------------------Europe 1 352 2 082 -35% 1 922 -30%Middle East & Africa 737 1 088 -32% 1 065 -31%Greater China 577 1 902 -70% 1 008 -43%Asia-Pacific 945 1 317 -28% 1 297 -27%North America 93 140 -34% 53 75%Latin America 542 558 -3% 652 -17%-----------------------------------------------------------------------Total 4 246 7 087 -40% 5 997 -29%----------------------------------------------------------------------- On a year-on-year basis Devices & Services net sales in the first quarter 2012declined in all regions, particularly in China, primarily due to competitiveindustry dynamics adversely affecting both our Mobile Phones and Smart Devicesnet sales. On a sequential basis, Devices & Services net sales in the firstquarter 2012 declined in all regions, except for North America, where saleswere driven by the introduction of the Nokia Lumia 710 with T-Mobile. VolumeThe following table sets forth the mobile device volumes for our Devices &Services business for the periods indicated, as well as the year-on-year andsequential growth rates, by geographic area. DEVICES & SERVICES MOBILE DEVICE VOLUMES BY GEOGRAPHIC AREA ------------------------------------------------------------------------million units Q1/2012 Q1/2011 YoY Change Q4/2011 QoQ Change----------------------------------------------------------------------------------------------------------------------------------------------Europe 15.8 23.4 -32% 25.3 -38%Middle East & Africa 21.4 22.2 -4% 25.9 -17%Greater China 9.2 23.9 -62% 14.7 -37%Asia-Pacific 26.1 27.3 -4% 34.7 -25%North America 0.6 1.2 -50% 0.5 20%Latin America 9.6 10.5 -9% 12.4 -23%-----------------------------------------------------------------------Total 82.7 108.5 -24% 113.5 -27%----------------------------------------------------------------------- On a year-on-year basis, the decline in our total Devices & Services volumes inthe first quarter 2012 was driven by significantly lower volumes in both MobilePhones and Smart Devices volumes as discussed below. The sequential decline in our total Devices & Services volumes in the firstquarter 2012 was driven by significantly lower Mobile Phones volumes and SmartDevice volumes, including lower seasonal demand for our devices, as discussedbelow. During the first quarter 2012, our overall channel inventory increased on asequential basis. We ended the first quarter 2012 around the high end of ournormal 4 to 6 week channel inventory range, but on an absolute unit basis,channel inventories declined sequentially. Average Selling PriceOn a year-on-year basis, the overall decrease in our Devices & Services ASP inthe first quarter 2012 was driven primarily by the lower ASP in Mobile Phones,a higher proportion of Mobile Phones sales and the negative impact from foreigncurrency hedging, partially offset by higher IPR royalty income. On a sequential basis, the overall decrease in our Devices & Services ASP inthe first quarter 2012 was driven primarily by a product mix shift towardsMobile Phones and the negative impact from foreign currency hedging, partiallyoffset by a positive impact from the depreciation of the Euro against certaincurrencies. Gross MarginOn a year-on-year basis, the decline in our Devices & Services non-IFRS grossmargin in the first quarter 2012 was driven primarily by the significant grossmargin decline in Smart Devices and, to a much lesser extent, in Mobile Phones,partially offset by higher IPR royalty income. On a sequential basis, the decline in our Devices & Services non-IFRS grossmargin in the first quarter 2012 was driven primarily by gross margin declinesin both Smart Devices and Mobiles Phones, partially offset by a positive impactfrom lower warranty costs, which is expected to be non-recurring, and higherIPR royalty income. Operating ExpensesDevices & Services non-IFRS operating expenses decreased 15% year-on-year and11% sequentially in the first quarter 2012. On both a year-on-year andsequential basis, operating expenses related to Mobile Phones increased 22% and10%, respectively, in the first quarter 2012, whereas operating expensesrelated to Smart Devices decreased 33% and 24%, respectively, in the firstquarter 2012. These year-on-year and sequential changes resulted, in additionto the factors described below, from the proportionate allocation of operatingexpenses being impacted by the relative mix of sales and gross profitperformance between Mobile Phones and Smart Devices. This resulted in higherand lower relative allocations to Mobile Phones and Smart Devices,respectively. In addition, both the year-on-year and sequential decline inSmart Devices was driven by the cost savings actions related to our Symbian andMeeGo activities. Devices & Services non-IFRS research and development expenses decreased 22%year-on-year in the first quarter 2012. On a sequential basis, Devices &Services non-IFRS research and development expenses decreased 11% in the firstquarter 2012. Both the year-on-year and sequential declines were primarily dueto a reduction in Symbian and MeeGo related costs as well as ongoing costcontrols. This was partially offset by an increase in Mobile Phones researchand development expenses primarily due to investments in product development tobring new innovations to the market in support of our strategy to bring theinternet and information to the next billion. Devices & Services non-IFRS sales and marketing expenses decreased 8%year-on-year in the first quarter 2012. On a sequential basis, Devices &Services non-IFRS sales and marketing expenses decreased 16% in the firstquarter 2012. Year-on-year, marketing expenses declined primarily due to lowermarketing expenditure on Symbian, partially offset by higher marketingexpenditure on Lumia. Sequentially, marketing expenses declined primarily dueto lower marketing expenditure on MeeGo and Symbian. Devices & Services non-IFRS administrative and general expenses decreased 5%year-on-year in the first quarter 2012 as near-term cost controls werepartially offset by shared function cost categorization. On a sequential basis,Devices & Services non-IFRS administrative and general expenses increased 26%in the first quarter 2012 due to shared function cost categorization. In the first quarter 2012, Devices & Services non-IFRS other income and expensehad a negative year-on-year and sequential impact on profitability. Reportedother income and expense was significantly adversely impacted in the firstquarter 2012 primarily as a result of restructuring-related expenses discussedbelow, which were recognized in Devices & Services Other. Cost Reduction Activities and Planned Operational AdjustmentsWe continue to target to reduce our Devices & Services non-IFRS operatingexpenses by more than EUR 1 billion for the full year 2013, compared to thefull year 2010 Devices & Services non-IFRS operating expenses of EUR 5.35billion. We plan to accelerate and substantially deepen Devices & Services costsavings, consistent with our strategic focus. Nokia will share further detailsas quickly as possible. During the first quarter 2012, Devices & Services recognized net charges of EUR91 million related to restructuring activities. As of the end of the firstquarter 2012, we had recognized cumulative charges of EUR 888 million relatedto restructuring activities. While the total extent of the restructuring activities is still to bedetermined, we currently anticipate cumulative charges in Devices & Services ofaround EUR 900 million before the end of 2012 in relation to our previouslyannounced cost reduction target of more than EUR 1 billion. We also believetotal cash outflows related to our Devices & Services restructuring activitieswill be below the level of the cumulative charges related to theserestructuring activities. SMART DEVICES The following table sets forth a summary of the results for our Smart Devicesbusiness unit for the periods indicated, as well as the year-on-year andsequential growth rates. SMART DEVICES RESULTS SUMMARY --------------------------------------------------------------------------------- Q1/2012 Q1/2011 YoY Q4/2011 QoQ Change Change --------------------------------------------------------------------------------Net sales (EUR millions)1 1 704 3 528 -52% 2 747 -38%--------------------------------------------------------------------------------Smart Devices volume (million 11.9 24.2 -51% 19.6 -39% units) --------------------------------------------------------------------------------Smart Devices ASP (EUR) 143 146 -2% 140 2%--------------------------------------------------------------------------------Gross margin (%) 15.6% 28.9% 19.9% --------------------------------------------------------------------------------Operating expenses (EUR 556 834 -33% 732 -24% millions)2 --------------------------------------------------------------------------------Contribution margin (%)2 -18.3% 5.3% -7.0% -------------------------------------------------------------------------------- Note 1: Does not include IPR royalty income. IPR royalty income is recognizedin Devices & Services Other net sales. Note 2: The year-on-year and sequential decreases in operating expensesresulted from the proportionate allocation of operating expenses being impactedby the relative mix of sales and gross profit performance between Mobile Phonesand Smart Devices, resulting in lower relative allocations to Smart Devices inthe first quarter 2012. Net SalesThe year-on-year decline in our Smart Devices net sales in the first quarter2012 was primarily due to significantly lower Symbian volumes. On a sequentialbasis, the decline in our Smart Devices net sales in the first quarter 2012 wasalso due to lower Symbian volumes, partially offset by growing sales of NokiaLumia devices. VolumeThe year-on-year decline in our Smart Devices volumes in the first quarter 2012continued to be driven by the strong momentum of competing smartphone platformsrelative to our Symbian devices. All regions showed a significant year-on-yeardecline in the first quarter 2012 except for Latin and North America, whichshowed slight year-on-year growth. On a sequential basis, the decline in our Smart Devices volumes in the firstquarter 2012 was primarily driven by lower Symbian volumes in all regions, aswell as lower seasonal demand for our products, which more than offset thesequential increase in Nokia Lumia device volumes. Average Selling PriceThe year-on-year decline in our Smart Devices ASP in the first quarter 2012 wasdriven primarily by price erosion due to the competitive environment and ahigher proportion of sales of lower priced Symbian devices. This was partiallyoffset by sales of Nokia Lumia devices at an ASP of approximately EUR 220, aswell as a positive impact related to deferred revenue on services sold incombination with our devices. Sequentially, the slight increase in our Smart Devices ASP in the first quarter2012 was driven primarily by a positive mix shift towards the sales of NokiaLumia devices, and a positive impact related to deferred revenue on servicessold in combination with our devices, partially offset by price actions takenrelated to specific products across our portfolio due to the competitiveenvironment. Gross MarginThe significant year-on-year decline in our Smart Devices gross margin in thefirst quarter 2012 was driven primarily by greater price erosion than costerosion within our Symbian portfolio due to the competitive environment,partially offset by a positive impact related to deferred revenue related onservices sold in combination with our devices and lower warranty costs. On a sequential basis, the decline in our Smart Devices gross margin in thefirst quarter 2012 was primarily driven by greater price erosion than costerosion mainly related to our Symbian and Nokia N9 smartphones, targeted pricereductions of the Nokia Lumia 710 to accelerate growth as well as higher perunit fixed costs related to our Symbian devices due to declining volumes. Theoverall sequential decline was partially offset by lower Symbian-relatedallowances and lower warranty costs. MOBILE PHONES The following table sets forth a summary of the results for our Mobile Phonesbusiness unit for the periods indicated, as well as the year-on-year andsequential growth rates. MOBILE PHONES RESULTS SUMMARY --------------------------------------------------------------------------------- Q1/2012 Q1/2011 YoY Q4/2011 QoQ Change Change --------------------------------------------------------------------------------Net sales (EUR millions)1 2 311 3 407 -32% 3 040 -24%--------------------------------------------------------------------------------Mobile Phones volume (million 70.8 84.3 -16% 93.9 -25% units) --------------------------------------------------------------------------------Mobile Phones ASP (EUR) 33 40 -18% 32 3%--------------------------------------------------------------------------------Gross margin (%) 25.9% 27.9% 27.7% --------------------------------------------------------------------------------Operating expenses (EUR 472 387 22% 429 10% million)2 --------------------------------------------------------------------------------Contribution margin (%)2 4.6% 16.5% 13.5% -------------------------------------------------------------------------------- Note 1: Does not include IPR royalty income. IPR royalty income is recognizedin Devices & Services Other net sales. Note 2: The year-on-year and sequential increases in operating expensesresulted from the proportionate allocation of operating expenses being impactedby the relative mix of sales and gross profit performance between MobilePhones and Smart Devices, resulting in higher relative allocations to MobilePhones in the first quarter 2012. Net SalesOn a year-on-year basis, our Mobile Phones net sales in the first quarter 2012decreased due to the lower ASP and volumes. On a sequential basis, the declinein our Mobile Phones net sales in the first quarter 2012 was due to lowervolumes. VolumeOn a year-on-year basis, the decline in our Mobile Phones volumes in the firstquarter 2012 was primarily driven by our reduced portfolio of higher pricedfeature phones compared to the first quarter 2011, partially offset by sales ofrecently introduced products which represented a higher proportion of ourportfolio. In addition, the year-on-year decline was due to distributors andoperators purchasing fewer of our feature phones during the first quarter 2012as they reduced their inventories of our feature phones compared to increasingtheir inventories in the first quarter 2011. The year-on-year decline in ourMobile Phones volumes in the first quarter 2012 was most pronounced in Chinaand Europe primarily due to competition from more affordable smartphones andincreased competition from competitors with broader portfolios of featurephones with more smartphone-like experiences, such as full touch devices. On a sequential basis, the decline in our Mobile Phones volumes in the firstquarter 2012 was primarily driven by lower seasonal demand for our featurephones and aggressive price competition, especially in entry-level featurephones, partially offset by sales of recently introduced products whichrepresented a higher proportion of our portfolio. The sequential decline wasalso due to distributors and operators purchasing fewer of our feature phonesduring the first quarter 2012 as they reduced their inventories of our featurephones compared to increasing their inventories in the fourth quarter 2011. Inaddition, we faced increased competition from more affordable smartphones andcompetitors with broader portfolios of feature phones with more smartphone-likeexperiences, such as full touch devices. The sequential decline in our MobilePhones volumes in the first quarter 2012 was most pronounced in India andEurope, primarily due to the factors mentioned above. Average Selling PriceThe year-on-year decline in our Mobile Phones ASP in the first quarter 2012 wasprimarily driven by an increased proportion of sales of lower priced devicesand the negative impact from foreign currency hedging, partially offset bysales of recently introduced higher priced devices, including the Asha family. On a sequential basis, our Mobile Phones ASP increased slightly in the firstquarter of 2012 due to a mix shift towards recently-introduced higher priceddevices, including the Asha family, as well as the positive impact from thedepreciation of the Euro against certain currencies, partially offset bygeneral price erosion and the negative impact from foreign currency hedging. Gross MarginThe year-on-year decline in our Mobile Phones gross margin in the first quarter2012 was primarily due to greater price erosion than cost erosion, a negativeproduct mix shift towards lower gross margin feature phones, partially offsetby lower warranty costs. The sequential decrease in our Mobile Phones gross margin in the first quarter2012 was primarily due to greater price erosion than cost erosion, partiallyoffset by a positive impact related to deferred revenue on services sold incombination with our devices and lower warranty costs. LOCATION & COMMERCE The following table sets forth a summary of the results for Location & Commercefor the periods indicated, as well as the year-on-year and sequential growthrates. LOCATION & COMMERCE RESULTS SUMMARY --------------------------------------------------------------------------------- Q1/201 Q1/201 YoY Q4/201 QoQ 2 1 Change 1 Change--------------------------------------------------------------------------------Net sales (EUR millions) 277 232 19% 306 -9%--------------------------------------------------------------------------------Non-IFRS gross margin (%) 77.7% 81.0% 77.8% --------------------------------------------------------------------------------Non-IFRS operating expenses (EUR 174 205 -15% 206 -16% millions) --------------------------------------------------------------------------------Non-IFRS operating margin (%) 12.9% -6.9% 9.5% -------------------------------------------------------------------------------- Net SalesThe year-on-year increase in Location & Commerce net sales in the first quarter2012 was primarily driven by higher recognition of deferred revenue related tosales of map platform licenses to Smart Devices and, to a lesser extent, byhigher sales of map content licenses to vehicle customers due to higherconsumer uptake of vehicle navigation systems as well as higher sales toportable navigation devices (PND) customers. Sequentially, the decrease in Location & Commerce net sales in the firstquarter 2012 was primarily due to seasonally lower sales to portable navigationdevices (PND) customers as well as lower sales of map update content licensesin the vehicle segment. Gross MarginOn a sequential basis, the Location & Commerce non-IFRS gross margin in thefirst quarter 2012 remained unchanged. On a year-on-year basis, the decline in Location & Commerce non-IFRS grossmargin in the first quarter 2012 was primarily due to a shift of research anddevelopment operating expenses to cost of sales as a result of the divestitureof the media advertising business. Operating ExpensesLocation & Commerce non-IFRS research and development expenses decreased 19%year-on-year in the first quarter 2012 reflecting a shift in expenses fromresearch and development to costs of sales related to the divestiture of themedia advertising business. Location & Commerce non-IFRS research anddevelopment expenses decreased 18% sequentially in the first quarter 2012primarily driven by cost reduction actions. Location & Commerce non-IFRS sales and marketing expenses decreased 14%year-on-year and 17% sequentially. On a year-on-year and sequential basis, theprimary driver for the decrease was cost reduction actions. In addition,reduced marketing spend contributed to the sequential decline. Location & Commerce non-IFRS administrative and general expenses increased 25%year-on-year and 11% sequentially in the first quarter 2012, primarily due tohigher use of services provided by shared support functions. NOKIA SIEMENS NETWORKS Nokia Siemens Networks completed the acquisition of Motorola Solutions'networks assets on April 30, 2011. Accordingly, the results of Nokia SiemensNetworks for the first quarter 2012 are not directly comparable to its resultsfor the first quarter 2011. The following table sets forth a summary of the results for Nokia SiemensNetworks for the periods indicated, as well as the year-on-year and sequentialgrowth rates. NOKIA SIEMENS NETWORKS RESULTS SUMMARY --------------------------------------------------------------------------------- Q1/201 Q1/201 YoY Q4/201 QoQ 2 1 Change 1 Change--------------------------------------------------------------------------------Net sales (EUR millions) 2 947 3 171 -7% 3 815 -23%--------------------------------------------------------------------------------Non-IFRS gross margin (%) 26.6% 26.9% 29.2% --------------------------------------------------------------------------------Non-IFRS operating expenses (EUR 937 852 10% 943 -1% millions) --------------------------------------------------------------------------------Non-IFRS operating margin (%) -5.0% 0.1% 4.6% -------------------------------------------------------------------------------- Net SalesThe following table sets forth Nokia Siemens Networks net sales for the periodsindicated, as well as the year-on-year and sequential growth rates, bygeographic area. NOKIA SIEMENS NETWORKS NET SALES BY GEOGRAPHIC AREA ------------------------------------------------------------------------EUR millions Q1/2012 Q1/2011 YoY Change Q4/2011 QoQ Change----------------------------------------------------------------------------------------------------------------------------------------------Europe 930 1 001 -7% 1 272 -27%Middle East & Africa 270 307 -12% 394 -31%Greater China 209 322 -35% 438 -52%Asia-Pacific 877 988 -11% 909 -4%North America 283 169 67% 293 -3%Latin America 378 384 -2% 509 -26%----------------------------------------------------------------------- Total 2 947 3 171 -7% 3 815 -23%----------------------------------------------------------------------- The year-on-year decrease in Nokia Siemens Networks' net sales in the firstquarter 2012 was driven primarily by a decline in sales of infrastructureequipment, which more than offset a slight increase in sales of services. Thesequential decline in Nokia Siemens Networks' net sales in the first quarter2012 was driven primarily by industry seasonality. At constant currency, Nokia Siemens Networks' net sales would have decreased 9%year-on-year and 24% sequentially. Gross MarginThe slight year-on-year decline in Nokia Siemens Networks' non-IFRS grossmargin in the first quarter 2012 was primarily due to an unfavorable mixtowards lower gross margin services revenues, partially offset by improvedperformance in infrastructure equipment. On a year-on-year basis, Nokia SiemensNetworks' non-IFRS gross margin in the first quarter 2012 was negativelyimpacted by an unfavorable regional sales mix. On a sequential basis, the decrease in Nokia Siemens Networks' non-IFRS grossmargin in the first quarter 2012 was driven by an unfavorable product mixtowards lower margin services as well as lower seasonal revenues. On asequential basis, Nokia Siemens Networks' non-IFRS gross margin in the firstquarter 2012 was negatively impacted by an unfavorable regional sales mix. Operating ExpensesNokia Siemens Networks' non-IFRS research and development expenses increased14% year-on-year in the first quarter 2012 primarily due to the addition of theresearch and development operations related to the acquired Motorola Solutionsnetworks assets as well as investments in strategic initiatives. On asequential basis, Nokia Siemens Networks' non-IFRS research and developmentexpenses in the first quarter 2012 were approximately flat. Nokia Siemens Networks' non-IFRS sales and marketing expenses decreased 3%year-on-year in the first quarter 2012 primarily due to the lower net sales,partially offset by the addition of the sales and marketing operations relatedto the acquired Motorola Solutions networks assets. On a sequential basis,Nokia Siemens Networks non-IFRS sales and marketing expenses decreased 3% inthe first quarter 2012 primarily due to the lower net sales. Nokia Siemens Networks' non-IFRS administrative and general expenses increased22% year-on-year in the first quarter 2012 primarily reflecting the addition ofMotorola Solutions' network assets. Sequentially, Nokia Siemens Networksnon-IFRS administrative and general expenses increased 6% in the first quarter2012 primarily due to higher legal costs. Nokia Siemens Networks' non-IFRS other income for the first quarter 2012 wasapproximately flat on both a year-on-year and sequential basis. Operating MarginThe lower year-on-year Nokia Siemens Networks non-IFRS operating margin in thefirst quarter 2012 was primarily driven by lower net sales and increasedoperating expenses. The sequential decline in Nokia Siemens Networks' non-IFRS operating margin inthe first quarter 2012 primarily reflected the lower seasonal net sales, lowergross margin and flat operating expenses. Strategy Update and Global Restructuring ProgramOn November 23, 2011 Nokia Siemens Networks announced its strategy to focus onmobile broadband and services and the launch of an extensive globalrestructuring program. Nokia Siemens Networks continues to target to reduce its non-IFRS annualizedoperating expenses and production overheads by EUR 1 billion by the end of2013, compared to the end of 2011. While these savings are expected to comelargely from organizational streamlining, the company will also target areassuch as real estate, information technology, product and service procurementcosts, overall general and administrative expenses, and a significant reductionof suppliers in order to further lower costs and improve quality. In the first quarter of 2012, Nokia Siemens Network recognized restructuringcharges and other associated items of EUR 772 million related to thisrestructuring program. While the total extent of the restructuring activitiesis still to be determined, we currently anticipate cumulative charges in NokiaSiemens Networks of around EUR 1 billion before the end of 2012. We alsobelieve total cumulative cash outflows related to the Nokia Siemens Networksrestructuring activities will be around the same level as the cumulativecharges related to these restructuring activities. Cash preservation is a clear priority at Nokia Siemens Networks, and thecompany intends to be self-funding in all aspects of its operations. NokiaSiemens Networks' restructuring program, combined with the company's focus onimproving its financial performance, is designed to enable the company to end2012 with higher net cash than at the end of 2011. FIRST QUARTER 2012 OPERATING HIGHLIGHTS NOKIA OPERATING HIGHLIGHTS- Nokia announced planned changes at its factories in Komarom in Hungary,Reynosa in Mexico and Salo in Finland. The measures followed a review ofsmartphone manufacturing operations that Nokia announced last September and aimto increase the company's competitiveness in the diverse global mobile devicemarket. These three factories are planned to focus on smartphone productcustomization, serving customers mainly in Europe and the Americas. Deviceassembly is expected to be transferred to Nokia factories in Asia, where themajority of component suppliers are based. - Nokia, and De' Longhi SpA, a global leader in household appliances, agreedterms for De' Longhi to acquire Nokia's production facility in Cluj, Romania.The transaction was completed in March 2012. - Nokia appointed Marko Ahtisaari as Executive Vice President, Design, and amember of the Nokia Leadership Team, effective February 1, 2012. He reportsdirectly to President and CEO Stephen Elop. DEVICES & SERVICES OPERATING HIGHLIGHTS SMART DEVICES- Nokia has continued to expand the breadth and depth of its Lumia range ofWindows Phone-based smartphones since their debut in November 2011. Consumersin 45 markets around the world can now purchase a Lumia smartphone, with moremarkets being added in the coming weeks and months. Key highlights in thegrowth of Lumia in the first quarter included: - In January, Nokia and T-Mobile commenced sales of the Nokia Lumia 710, thefirst Lumia product for the United States. - In January, Nokia announced the Nokia Lumia 900 with AT&T in the UnitedStates. The Lumia 900 is the first of Nokia's Windows Phone-based range tofeature high-speed LTE connectivity. The device, which has a 4.3-inch AMOLEDClearBlack Display, went on sale in April. - In February, at the 2012 Mobile World Congress, Nokia announced that it isbringing the Nokia Lumia 900 to other markets outside the United States in aDC-HSPA variant, for high speed data connection (42Mbits download) in countrieswhere LTE is not available. The device is expected to begin shipping during thesecond quarter. - In February, Nokia announced the Nokia Lumia 610, the company's fourth andmost affordable Lumia smartphone, designed as the perfect introduction toWindows Phone for a younger audience. The device is expected to ship during thesecond quarter 2012. - In February, Nokia announced Nokia Reading, providing a single, integratedreading hub experience. Nokia Reading makes it easier and faster to enjoy news,books, and audio books including an extensive catalogue of local languagereading material and the ability to access content offline. - In March, Nokia and China Telecom announced the Nokia 800C, the first CDMAWindows Phone in China and Nokia's first Lumia phone for the world's largestsmartphone market. The device went on sale in early April. - In February, Nokia announced the Nokia 808 PureView, the first smartphone tofeature Nokia PureView imaging technologies, bringing together high resolutionsensors, exclusive Carl Zeiss optics and Nokia-developed algorithms, which willsupport new high-end imaging experiences for future Nokia products. The Nokia808 PureView features a large, high-resolution 41 megapixel sensor and newpixel oversampling technology. The device is expected to ship during the secondquarter 2012. MOBILE PHONES- Nokia has continued to expand the breadth and depth of its Asha family offeature phones since their debut in late 2011. Consumers in more than 100markets around the world can now purchase an Asha device. Key highlights in thegrowth of the Asha family in the first quarter included: - In February, Nokia announced the Nokia Asha 302, the first Series 40-basedphone to support Mail for Exchange. The Asha 302 went on sale during the firstquarter. - In February, Nokia announced the Nokia Asha 202, which combines a traditionalkeypad with a touch screen and features Nokia's dual SIM Easy Swap technology.The Asha 202 is expected to ship during the second quarter 2012. - In February, Nokia announced the Asha 203, a single SIM phone which combinesa traditional keypad with a touch screen. The Asha 203 is expected to shipduring the second quarter 2012. - Nokia announced an evolution of Nokia Life Tools, now known as Nokia Life,which provides life-enhancing information across the range of Nokia Series 30and Series 40 products. Since its 2009 launch in India, the SMS-based servicehas expanded to China, Indonesia and Nigeria. To date, more than 50 millionpeople have experienced its benefits. - Nokia Browser, Nokia's cloud-accelerated browser for Series 40 devices,continued to grow rapidly with support for 38 devices in 87 languages and morethan 200 countries. During the first quarter, we released a significant upgradeto the product improving speed and access to web apps. Nokia Browser is thefirst of its kind to support web apps, and since the release of the SDK in2011, developer support has continued to grow. LOCATION & COMMERCE OPERATING HIGHLIGHTSNokia's Location & Commerce business continued to strengthen its location-basedofferings during the first quarter: - Location & Commerce updated Nokia Maps and Nokia Drive for Nokia's Lumiasmartphones twice. With these updates, Nokia Maps now also features a real-timetraffic view in selected markets and enables the creation and collection offavorite places as well as route sharing via SMS, email or social networks,while Nokia Drive is now supporting a full offline experience from routecalculation to navigation and rerouting. Nokia Drive also features a newdashboard that includes speed limit alerts and provides options betweenestimated time of arrival, time to destination and distance to destination. - Location & Commerce launched Nokia Transport, a mobile application forNokia's Lumia smartphones providing underground, tram, suburban train and busdirections for more than 500 cities in 46 countries in the most convenient way. - Location & Commerce released the beta version of Nokia Maps Suite 2.0 for itsNokia Belle smartphones, bundling a number of individual maps applications likeDrive, Maps, Public Transport into one convenient package, offering newfeatures such as up-to-date, location-aware weather forecasts, and a homescreen widget to explore places nearby and letting people see their geo-taggedphotos on the map at the places they were taken. - Location & Commerce introduced walk navigation (beta) for its HTML5 basedmobile web offering on m.maps.nokia.com that lets people use Nokia Maps onnon-Nokia devices running Android and iOS. - Location & Commerce updated Nokia Maps and Nokia Drive for the Nokia N9.- Location & Commerce launched a new shared map design with Bing Maps, jointlydeveloped with Microsoft. - Nokia announced that it is planning to integrate Groupon deals into NokiaMaps and leverage location information from Nokia Drive and Nokia Transport, sothat people can find local deals in the places they go to most often, or planto visit. - Location & Commerce launched NAVTEQ Traffic(tm) in India, making the real-timetraffic service available to more than 26 million people in Delhi and Mumbai. - NAVTEQ(r) Maps was selected by Yandex, Russia's premier internet company, tosupply map data for their global web portal properties. - NAVTEQ(r) Maps was selected by Nikon to power map display and geotaggingcapabilities on the COOLPIX AW series of digital cameras. NOKIA SIEMENS NETWORKS OPERATING HIGHLIGHTS- Nokia Siemens Networks announced a number of mobile broadband deals in thefirst quarter, including: upgrading Saudi Telecom Company's nationwide GSM and3G networks and expanding its commercial 4G network; working with Bharti Airtelto build and operate a large-scale TD-LTE 4G network in Maharashtra, India;transforming mobile broadband efficiency for Telkomsel in Indonesia; becoming amobile broadband and infrastructure services provider for KT in Korea; andworking with T-Mobile and Orange in Poland to deploy and upgrade GSM and HSPAnetworks, paving the way for transition to LTE. - Nokia Siemens demonstrated its commitment to staying at the forefront ofmobile broadband innovation with the opening of a mobile broadband testing anddevelopment facility which opened in Silicon Valley in the United States inFebruary. - At Mobile World Congress in February, Nokia Siemens Networks launched its'FlexiZone' approach to mobile broadband coverage, which will deliver fasterand more flexible 4G across areas with a very high user density moreefficiently and cost effectively. During the first quarter the company alsoachieved world record data speeds, exceeding 1.4 Gbps using its LTE-Advanced 4Gsystem. - In March, Nokia Siemens Networks and Juniper Networks announced the launch ofthe 'Integrated Packet Transport Network', addressing the need for serviceproviders to simplify network architecture and giving operators moreflexibility in their transport networks in a cost effective way, reflectingNokia Siemens Networks Liquid Net approach to transforming networks to copewith unpredictability and increasing network demand. - The launch of the Customer Experience Management (CEM) on Demand portalallowed Nokia Siemens Networks to showcase a new way of handling relationshipswith the world's six billion mobile users. The single entry point portal,accessible from across entire operator organizations, is designed to offerdashboard views of mobile operators' key performance indicators and recommendactions they can take to improve their customer experience. Telkomsel hassigned up to use the new service, enabling it to view real-time metrics andprovide improved service quality for its customers across Indonesia. - In Managed Services, Bharti Airtel extended its contract with Nokia SiemensNetworks to continue to provide its managed services for a further five years. - In December 2011, Nokia Siemens Networks signed a forward starting term andmulticurrency revolving credit facilities agreement with major internationalbanks for EUR 1 255 million to replace its existing revolving credit facilitywhen it matures in June 2012. By April 2012 this new commitment had beenincreased to EUR 1 500 million. FORWARD-LOOKING STATEMENTSIt should be noted that certain statements herein that are not historical factsare forward-looking statements, including, without limitation, those regarding:A) the expected plans and benefits of our partnership with Microsoft to bringtogether complementary assets and expertise to form a global mobile ecosystemfor smartphones; B) the timing and expected benefits of our new strategies,including expected operational and financial benefits and targets as well aschanges in leadership and operational structure; C) the timing of thedeliveries of our products and services; D) our ability to innovate, develop,execute and commercialize new technologies, products and services; E)expectations regarding market developments and structural changes; F)expectations and targets regarding our industry volumes, market share, prices,net sales and margins of our products and services; G expectations and targetsregarding our operational priorities and results of operations; H) expectationsand targets regarding collaboration and partnering arrangements; I) the outcomeof pending and threatened litigation; J) expectations regarding the successfulcompletion of acquisitions or restructurings on a timely basis and our abilityto achieve the financial and operational targets set in connection with anysuch acquisition or restructuring; and K) statements preceded by 'believe,''expect,' 'anticipate,' 'foresee,' 'target,' 'estimate,' 'designed,' 'aim','plans,' 'will' or similar expressions. These statements are based onmanagement's best assumptions and beliefs in light of the information currentlyavailable to it. Because they involve risks and uncertainties, actual resultsmay differ materially from the results that we currently expect. Factors thatcould cause these differences include, but are not limited to: 1) our successin the smartphone market, including our ability to introduce and bring tomarket quantities of attractive, competitively priced Nokia products withWindows Phone that are positively differentiated from our competitors'products, both outside and within the Windows Phone ecosystem; 2) our abilityto make Nokia products with Windows Phone a competitive choice for consumers,and together with Microsoft, our success in encouraging and supporting acompetitive and profitable global ecosystem for Windows Phone smartphones thatachieves sufficient scale, value and attractiveness to all market participants;3) the difficulties we experience in having a competitive offering of Symbiandevices and maintaining the economic viability of the Symbian smartphoneplatform during the transition to Windows Phone as our primary smartphoneplatform; 4) our ability to realize a return on our investment in nextgeneration devices, platforms and user experiences; 5) our ability to produceattractive and competitive feature phones, including devices with moresmartphone-like features, in a timely and cost efficient manner withdifferentiated hardware, software, localized services and applications; 6) theintensity of competition in the various markets where we do business and ourability to maintain or improve our market position or respond successfully tochanges in the competitive environment; 7) our ability to retain, motivate,develop and recruit appropriately skilled employees; 8) our ability toeffectively and smoothly implement the new operational structure for ourbusinesses, achieve targeted efficiencies and reductions in operating expenses;9) the success of our Location & Commerce strategy, including our ability tomaintain current sources of revenue, provide support for our Devices & Servicesbusiness and create new sources of revenue from our location-based services andcommerce assets; 10) our success in collaboration and partnering arrangementswith third parties, including Microsoft; 11) our ability to increase our speedof innovation, product development and execution to bring new innovative andcompetitive mobile products and location-based or other services to the marketin a timely manner; 12) our dependence on the development of the mobile andcommunications industry, including location-based and other servicesindustries, in numerous diverse markets, as well as on general economicconditions globally and regionally; 13) our ability to protect numerouspatented standardized or proprietary technologies from third-party infringementor actions to invalidate the intellectual property rights of thesetechnologies; 14) our ability to maintain and leverage our traditionalstrengths in the mobile product market if we are unable to retain the loyaltyof our mobile operator and distributor customers and consumers as a result ofthe implementation of our strategies or other factors; 15) the success,financial condition and performance of our suppliers, collaboration partnersand customers; 16) our ability to manage efficiently our manufacturing andlogistics, as well as to ensure the quality, safety, security and timelydelivery of our products and services; 17) our ability to source sufficientamounts of fully functional quality components, sub-assemblies, software andservices on a timely basis without interruption and on favorable terms; 18) ourability to manage our inventory and timely adapt our supply to meet changingdemands for our products; 19) any actual or even alleged defects or otherquality, safety and security issues in our product; 20) the impact of acybersecurity breach or other factors leading to any actual or alleged loss,improper disclosure or leakage of any personal or consumer data collected by usor our partners or subcontractors, made available to us or stored in or throughour products; 21) our ability to successfully manage the pricing of ourproducts and costs related to our products and operations; 22) exchange ratefluctuations, including, in particular, fluctuations between the euro, which isour reporting currency, and the US dollar, the Japanese yen and the Chineseyuan, as well as certain other currencies; 23) our ability to protect thetechnologies, which we or others develop or that we license, from claims thatwe have infringed third parties' intellectual property rights, as well as ourunrestricted use on commercially acceptable terms of certain technologies inour products and services; 24) the impact of economic, political, regulatory orother developments on our sales, manufacturing facilities and assets located inemerging market countries; 25) the impact of changes in government policies,trade policies, laws or regulations where our assets are located and where wedo business; 26) the potential complex tax issues and obligations we may incurto pay additional taxes in the various jurisdictions in which we do business;27) any disruption to information technology systems and networks that ouroperations rely on; 28) unfavorable outcome of litigations; 29) allegations ofpossible health risks from electromagnetic fields generated by base stationsand mobile products and lawsuits related to them, regardless of merit; 30)Nokia Siemens Networks ability to implement its new strategy and restructuringplan effectively and in a timely manner to improve its overall competitivenessand profitability; 31) Nokia Siemens Networks' success in thetelecommunications infrastructure services market and Nokia Siemens Networks'ability to effectively and profitably adapt its business and operations in atimely manner to the increasingly diverse service needs of its customers; 32)Nokia Siemens Networks' ability to maintain or improve its market position orrespond successfully to changes in the competitive environment; 33) NokiaSiemens Networks' liquidity and its ability to meet its working capitalrequirements; 34) Nokia Siemens Networks' ability to timely introduce newcompetitive products, services, upgrades and technologies; 35) Nokia SiemensNetworks' ability to execute successfully its strategy for the acquiredMotorola Solutions wireless network infrastructure assets; 36) developmentsunder large, multi-year contracts or in relation to major customers in thenetworks infrastructure and related services business; 37) the management ofour customer financing exposure, particularly in the networks infrastructureand related services business; 38) whether ongoing or any additionalgovernmental investigations into alleged violations of law by some formeremployees of Siemens may involve and affect the carrier-related assets andemployees transferred by Siemens to Nokia Siemens Networks; and 39) anyimpairment of Nokia Siemens Networks customer relationships resulting fromongoing or any additional governmental investigations involving the Siemenscarrier-related operations transferred to Nokia Siemens Networks, as well asthe risk factors specified on pages 13-47 of Nokia's annual report Form 20-Ffor the year ended December 31, 2011 under Item 3D. 'Risk Factors.' Otherunknown or unpredictable factors or underlying assumptions subsequently provingto be incorrect could cause actual results to differ materially from those inthe forward-looking statements. Nokia does not undertake any obligation topublicly update or revise forward-looking statements, whether as a result ofnew information, future events or otherwise, except to the extent legallyrequired. Nokia, Helsinki - April 19, 2012 Media and Investor Contacts: Corporate Communications, tel. +358 7180 34900Investor Relations Europe, tel. +358 7180 34927Investor Relations US, tel. +1 914 368 0555 - Nokia plans to publish its second quarter 2012 interim report on July 19,2012. - Nokia's Annual General Meeting will be held on May 3, 2012. www.nokia.com Click on, or paste the following link into your web browser, to view theassociated documents https://newsclient.omxgroup.com/cds/DisclosureAttachmentServlet?messageAttachmentId=388283 News Source: NASDAQ OMX 19.04.2012 DGAP's Distribution Services include Regulatory Announcements,Financial/Corporate News and Press Releases.Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------------- Language: EnglishCompany: Nokia FinlandPhone: Fax: E-mail: Internet: ISIN: FI0009000681Category Code: IRLSE Ticker: 0HAFSequence Number: 1050Time of Receipt: Apr 19, 2012 12:00:04 End of Announcement DGAP News-Service ---------------------------------------------------------------------------UK-Regulatory-announcement transmitted by DGAP - a company of EquityStory AG.The issuer is solely responsible for the content of this announcement.
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