HELSINKI (AFP) - Nokia, the world's biggest mobile phone manufacturer, has reported net profit for the fourth quarter in line with expectations, but forecast further falls in the selling price of handsets in 2006.
The Finnish company said that net profit in the quarter had slipped by 1.0 percent to 1.073 billion euros, but that earnings per share had risen to 0.25 euros (0.31 dollars) against 0.24 euros a year earlier.
The group also said that the average selling price (ASP) for its mobile phones, which has steadily declined, fell to 99 euros in the fourth quarter, from 102 euros in the third quarter and 111 euros in the fourth quarter of 2004.
Nokia shares, which had traded more than 2.0 percent higher in early Helsinki business on expectations of strong results, dropped immediately after the earnings report.
The results were "weaker than expected", said Petri Arjama, analyst at Handelsbanken.
In early afternoon, Nokia's shares were trading 2.4 percent lower at 14.75 euros on the Helsinki stock exchange.
"ASP at 99 euros was also below the consensus of 100 euros and the company sees first quarter ASP flat to lower," said a dealer at a Scandinavian broker. "The market had been hoping for 100 euros," he added.
Nokia said that the average selling price would fall further in 2006, a development "primarily driven by a mix shift in our volumes to markets where low-end models predominate".
It said that lower selling prices were "consistent with the industry trend, specifically the strong volume growth in emerging markets".
Furthermore, Nokia's global market share increased by a modest single percentage point to 34 percent in the fourth quarter from 33 percent in the third, which dampened expectations by analysts that Nokia could hit the 40-percent mark this year.
Group sales increased by nine percent to 10.33 billion euros overall, and by six percent for the core mobile phone operation alone.
However, sales fell in the networks and enterprise solutions business unit, which builds the infrastructure for mobile phone networks, resulting in a six-percent decline in group operating profit to 1.368 billion euros.
But one broker said he could see light at the end of the tunnel for the networks business after Nokia became slightly more optimistic.
"They raised their ful-year outlook for networks to 'moderate' growth from the earlier forecast of 'slight to modest' growth," he said.
Nokia's chief executive Jorma Ollila said that mobile phone unit sales in 2005 had been driven by gains in China, the Asia-Pacific region as well as Europe.
In China, where Nokia is market leader, the company extended its lead over second-placed Motorola, he said.
Nokia also unveiled plans to buy back 6.5 billion euros worth of its own shares this year.
Share buybacks are used by companies with excess cash and have the effect of boosting dividend payments to shareholders and often result in a rise in the share price.
Nokia raised its dividend to 0.37 euros per share for 2005 from 0.33 in 2004.
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