HTC on Monday reported that the company’s fourth quarter earnings missed analysts’ estimates. While speaking on the vendor’s earnings call, HTC’s chief financial officer said that the manufacturer ”dropped the ball” with its 2011 devices, SlashGear reports. Winston Yung admitted that the company’s LTE handsets were too thick, offered insufficient battery life and that there was plenty of work to be done to improve both “design and components.” Products launched in the fourth quarter “are not selling as we expected,” Yung said. New phones are on the way, however, and HTC’s next-generation smartphones are expected to be revealed later this month. BGR exclusively reported this past November that HTC will unveil the Ville at Mobile World Congress along side the company’s quad-core flagship HTC Edge.

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Thanks to a strong fourth quarter, Apple has passed LG to become the world’s third largest cell phone vendor by volume, according to new estimates from market research firm IDC. The worldwide mobile phone market grew 6.1%  year-over-year in the fourth quarter as the feature phone market continued to decline to its lowest growth rate in two years. Vendors shipped 427.4 million phones in the fourth quarter compared to 402.8 million units in the same quarter last year. Nokia and Samsung remained the top and No.2 vendors, respectively, though Nokia’s phone shipments slid 7.9% while shipments of Samsung handsets grew 17.6% compared to the same quarter in 2010. Read on for more

“Apple jumped into the third spot globally from the fifth spot last quarter thanks to a record-breaking quarter of shipments,” IDC stated in a press release. ”That represents the Cupertino-based company’s highest-ever ranking on IDC’s Top 5 global mobile phone leaderboard. The launch of Apple’s iPhone 4S smartphone, which is now available in over 90 countries (as of mid-January), was the primary reason the company leapt over LG and ZTE in 4Q11. Device sales in the U.S. and Japan were particularly strong given extra sales days in the quarter and carrier distribution.” The firm’s full press release follows below.

Worldwide Mobile Phone Market Maintains Its Growth Trajectory in the Fourth Quarter Despite Soft Demand for Feature Phones, According to IDC 

01 Feb 2012

FRAMINGHAM, Mass. February 1, 2011 – The worldwide mobile phone market grew 6.1% year over year in the fourth quarter of 2011 (4Q11), as the feature phone market declined faster than anticipated, dragging market growth down to its lowest point in over two years. According to the International Data Corporation (IDC) Worldwide Mobile Phone Tracker, vendors shipped 427.4 million units in 4Q11 compared to 402.8 million units in the fourth quarter of 2010. The 6.1% year-over-year growth was higher than IDC’s forecast of 4.4% for the quarter, but weaker than the 9.3% growth in 3Q11.

“The mobile phone market exhibited unusually low growth last quarter, which shows it is not immune to weaker macroeconomic conditions worldwide,” said Kevin Restivo, senior research analyst with IDC’s Worldwide Mobile Phone Tracker. “The introduction of high-growth products such as the iPhone 4S, which shipped in the fourth quarter, bolstered smartphone growth. Yet overall market growth fell to its lowest point since 3Q09 when the global economic recession was in full bloom.”

While smartphones continue to grow in popularity, feature phones still comprise the majority of all mobile phone shipments. “Feature phones accounted for a majority of shipments from four of the five market leaders during the quarter,” said Ramon Llamas, senior research analyst with IDC’s Mobile Phone Technology and Trends team. “Even though their proportion is eroding, feature phones maintain their appeal on the basis of price and ease of use.

“At the same time, feature phones are fighting to maintain their market share,” added Llamas. “To meet the challenge, feature phones are becoming more like smartphones, incorporating mobile Internet and third-party applications. While this may not stem the smartphone tide, it should slow down the rate at which smartphones are selected over feature phones.”

Regional Highlights

• In Asia/Pacific (excluding Japan), the feature phone market declined in conjunction with the region’s largest feature phone markets – China, India, and Indonesia. The impact on phone demand due to the holiday season, which generally means a sales uplift, was minimal in this category. Meanwhile, smartphones maintained their growth momentum as the iPhone 4S was well received in Australia, Hong Kong, Korea, and Taiwan. Competition in the Android market intensified as mid-range vendors, such as Lenovo, Coolpad, and Huawei, shipped large numbers in their home market of China. Elsewhere, the rest of the Android market was dominated by Samsung, followed by HTC and LG. Windows Phone gained some momentum thanks to sales of the HTC Titan and Radar and Nokia Lumia. In Japan, pent-up demand for mobile phones after last year’s natural disasters and weakened economy meant unusually high growth for the country’s mobile phone market. Smartphone sellers, such as Apple, fared particularly well while non-Japanese vendors continue to make incremental gains in the market.

• The Western European mobile phone market was impacted by lower demand, a result of the worsening economic environment. Smartphone growth was not enough to offset the feature phones decline, despite excellent performances from Apple and Samsung. Nokia experienced another difficult quarter as a result of its transition towards Windows Phones. Feature phone shipments were near historic lows, supported primarily by very low-end devices. Overall, the Central Europe, Middle East and Africa (CEMA) markets showed strong double-digit growth due in large part to Samsung’s continued strength in the regions. Bucking its global troubles, Nokia shipments flattened out in the regions after a strong third quarter, enabling it to remain the market leader in the regions. Apple continued to make quiet progress in the regions as well.

• In North America, smartphones held the spotlight with the launch of the Apple iPhone 4S, while LTE smartphones from HTC, LG, Motorola, and Samsung also made important gains. Research In Motion launched several new phones running on BB OS 7 during the quarter, and signaled a late 2012 timetable for its first BlackBerry 10 smartphones to reach the market, leaving an opportunity to its competitors to attack its market share.

• Smartphones also took center stage in Latin America with the launch of multiple models across the region, particularly sub-$200 Android models. The low price points have enabled broader appeal, and have also found placement among popular prepaid markets. Although smartphones continued to grab attention, low-cost feature phones ruled the market, with strong participation from Nokia, Samsung, and multiple Chinese vendors.

Vendor Highlights

Nokia finished the year exactly where it began: as the undisputed leader of total mobile phone shipments. The company took another step in its storied transition, having officially launched its first Windows Phone-powered Lumia smartphones and its Asha line of smartphone-like feature phones. While both have received positive response from the market, Nokia has been quick to adjust its retail experience, customer engagement, and hardware bug fixes. At the same time, the increased focus on the Lumia, combined with changing market conditions in key markets, has prompted Nokia to change its strategy on Symbian smartphones. Fewer Symbian devices will be sold in 2012. Still, Nokia’s broad distribution around the world and manufacturing capabilities make it a serious contender to maintain its leadership position.

Samsung finished the quarter and the year reaching new record levels: breaking the 90 million unit mark for the first time in a single quarter and breaking the 300 million mark for the first time in a single year. Leading the charge for Samsung was its growing smartphone volumes, boosted by the release of several high-end devices (Galaxy S II, Galaxy Note, Galaxy Nexus), mass market models (Galaxy Ace, and Galaxy Y), and new Windows Phone smartphones (Focus Flash and the Focus S). These, along with its own steadily growing feature phone volumes, pushed Samsung closer to market leader Nokia, with fewer than 20 million units separating them in 4Q11.

Apple jumped into the third spot globally from the fifth spot last quarter thanks to a record-breaking quarter of shipments. That represents the Cupertino-based company’s highest-ever ranking on IDC’s Top 5 global mobile phone leaderboard. The launch of Apple’s iPhone 4S smartphone, which is now available in over 90 countries (as of mid-January), was the primary reason the company leapt over LG and ZTE in 4Q11. Device sales in the U.S. and Japan were particularly strong given extra sales days in the quarter and carrier distribution.

LG‘s total volumes declined for the third consecutive quarter, sinking to levels not seen since the second quarter of 2007. Driving this result was a combination of waning interest in its aging feature phones and stalled smartphone volumes. In addition, from a full year perspective, LG posted the largest full year-over-year decline among the leading vendors. Still, the quarter did have some bright spots, including a return to profitability and a warm reception for its Optimus LTE smartphones across multiple markets. 2012 will feature more smartphones from LG, especially LTE-powered models, but the competition has similar smartphone strategies.

Chinese vendor ZTE nearly tied with LG for fourth place, with fewer than a million units separating the two vendors. Long known as a purveyor of entry level devices, ZTE’s smartphones increasingly moved into the spotlight. The company’s primary targets included countries throughout Asia/Pacific, but it also gained presence in EMEA and Latin America, and branched out into North America. Key models for the quarter included its popular mass-market Blade and mid-range Skate Android smartphones, and recently the company added its first Windows Phone-powered smartphone, the Tania.

Motorola Mobility on Thursday announced the company’s results for the fourth quarter last year. The vendor managed $3.4 billion in revenue but posted a net loss of $80 million, or $0.27 per share. Motorola posted a profit of $0.27 per share in the same quarter a year earlier. For the full year, the company’s revenue totaled $13.1 billion, up 14% compared to 2010, and it reported a net loss was $0.84 per share compared to a loss of $0.29 per share in 2010. Motorola shipped 10.5 million mobile devices in the fourth quarter, including 200,000 tablets, and full-year device shipments totaled 42.4 million units. Motorola Mobility’s full press release follows below.

Motorola Mobility Announces Fourth Quarter and Full-Year Financial Results

LIBERTYVILLE, Ill., Jan. 26, 2012 /PRNewswire/ –

Fourth Quarter Financial Highlights

• Net revenues of $3.4 billion
• Non-GAAP net earnings of $0.20 per share compared to net earnings of $0.37 per share in fourth quarter 2010; GAAP net loss of $0.27 per share compared to net earnings of$0.27 per share in fourth quarter 2010
• Mobile Devices net revenues of $2.5 billion, up 5 percent from fourth quarter 2010; Non-GAAP operating loss of $19 million; GAAP operating loss of $70 million
• Shipped 10.5 million mobile devices, including 5.3 million smartphones
• Home net revenues of $897 million, down 11 percent from fourth quarter 2010; Non-GAAP operating earnings of $84 million; GAAP operating earnings of $57 million

Motorola Mobility Holdings, Inc. (NYSE: MMI) today reported net revenues of $3.4 billion in the fourth quarter of 2011, comparable to the fourth quarter of 2010. The GAAP net loss in the fourth quarter of 2011 was $80 million, or $0.27 per share, compared to net earnings of $80 million, or $0.27 per share, in the fourth quarter of 2010. On a non-GAAP basis, net earnings in the fourth quarter 2011 were $61 million, or $0.20 per share, compared to net earnings of $108 million, or $0.37 per share, in the fourth quarter of 2010.

For the full year, 2011 net revenues were $13.1 billion, up 14 percent compared to 2010. For the full year, the GAAP net loss was $0.84 per share compared to a loss of $0.29 per share in 2010. On a non-GAAP basis, net earnings were $0.33 per share compared to a loss of $0.28 per share in 2010.

The Company generated positive operating cash flow of $225 million and $357 million in the fourth quarter and full year, respectively. Total cash at the end of the quarter was $3.6 billion and includes cash, cash equivalents, and cash deposits.

Details on non-GAAP adjustments and the use of non-GAAP measures are included later in this press release and in the financial tables.

“In the fourth quarter, we received very positive consumer response to Motorola RAZR, which combined an iconic brand with ultra-thin in an innovative smartphone.  Our Home business continues to be a leader in the industry’s transformation to all IP, with unique solutions that enable rich media experiences across any screen,” said Sanjay Jha, chairman and chief executive officer, Motorola Mobility. “We remain energized by the proposed merger with Google and continue to focus on creating innovative technologies.”

Operating Results

Mobile Devices net revenues in the fourth quarter, impacted by the increased competitive environment, were $2.5 billion, up 5 percent compared with the year-ago quarter. The GAAP operating loss was $70 million compared to operating earnings of $72 million in the year-ago quarter. The non-GAAP operating loss was $19 million compared to operating earnings of $56 million in the year-ago quarter. For the full year 2011, net revenues were $9.5 billion, an increase of 22 percent compared to 2010. The 2011 GAAP operating loss was$285 million compared to an operating loss of $76 million in 2010. The 2011 non-GAAP operating loss was $126 million compared to an operating loss of $198 million in 2010.

The Company shipped a total of 10.5 million and 42.4 million mobile devices in the fourth quarter and full year 2011, respectively. This included 5.3 million and 18.7 million smartphones and approximately 200 thousand and 1 million tablets in the fourth quarter and full year, respectively.

Mobile Devices highlights:

• Launched Motorola RAZR^™ extending the iconic RAZR brand around the world
• Announced DROID RAZR MAXX^™, featuring twice as much battery life as the leading competitor and measuring only 8.99 millimeters
• Unveiled the award-winning DROID 4 by Motorola, the thinnest and most powerful 4G LTE QWERTY smartphone featuring a five-row keyboard and edge-lit keys
• Introduced two new 4G LTE tablets, the DROID XYBOARD 10.1^™ and XYBOARD 8.2^™.
• Announced the “life proof” Motorola DEFY^™ MINI and slim MOTOLUXE^™, two new value priced additions to Motorola’s growing budget-friendly portfolio
• Shipped award-winning MOTOACTV^™, the world’s first combined GPS fitness tracker and MP3 player
• Launched two flagship devices in China – the TD-SCDMA Motorola MT917 and the Motorola XT928, a dual-core, dual-mode, dual-standby smartphone

Home segment net revenues in the fourth quarter were $897 million, down 11 percent compared with the year-ago quarter. GAAP operating earnings were $57 million, compared to$54 million in the year-ago quarter. Non-GAAP operating earnings were $84 million compared to $90 million in the year-ago quarter. Fourth quarter set-top shipments were down 3 percent compared to the year-ago quarter. For the full year 2011, net revenues were $3.5 billion, compared to $3.6 billion in 2010. GAAP operating earnings increased to $226 millionfrom $152 million in 2010. The 2011 non-GAAP operating earnings increased to $332 million from $272 million in 2010. Full year set-top shipments were up 6 percent compared to 2010.

Home highlights:

• Launched DreamGallery next-generation HTML-5 video navigation software in North America with Shaw Communications
• Expanded video leadership and paved the way for Canada’s move to all-MPEG-4 broadcast and On-Demand HD services with Eastlink
• Demonstrated market leadership with introduction of new carrier Ethernet product line for the deployment of cost-effective commercial services
• Introduced Motorola APEX3000, which delivers market-leading density to cost-effectively add greater demand for narrowcast services such as VOD and DVR
• Selected by Altibox AS in Norway to provide VAP 2400 HD wireless video bridge to enable multi-room TV services

Merger Update

As previously announced on August 15, 2011, Motorola Mobility and Google Inc. (“Google”) (NASDAQ: GOOG) entered into a definitive agreement for Google to acquire Motorola Mobility for $40.00 per share in cash, or a total of approximately $12.5 billion.  On November 17, 2011, Motorola Mobility stockholders voted overwhelmingly to approve the proposed merger with Google at the Company’s Special Meeting of Stockholders.  The Company continues to work closely with Google to complete the proposed acquisition of Motorola Mobility as expeditiously as possible.

The Company notes that the transaction remains subject to various closing conditions. Antitrust clearances, or waiting period expirations, are required by the U.S. Department of Justice (DOJ), by the European Commission, and in Canada, China, Israel, Russia, Taiwan and Turkey. Requisite filings have been submitted to the appropriate regulatory body in each of these jurisdictions. Clearances have been received in Turkey and Russia. In Canada and the United States, the statutory waiting period for the transaction has expired although the parties have been informed that the reviewing agencies have not closed their respective investigations.  In December 2011, the Chinese Ministry of Commerce proceeded to phase two of its investigation.  In February, the European Commission is expected to announce whether it will close its investigation or proceed to a phase two investigation.

The Company currently expects the transaction to close in early 2012 once all conditions have been satisfied and reminds stockholders that it is possible that the failure to timely meet such conditions or other factors outside of the Company’s control could delay or prevent completion of the transaction altogether.

For more information on the proposed merger, please visit http://investors.motorola.com.

Conference Call and Webcast

In light of the pending acquisition of the Company by Google, the Company does not conduct a financial analyst conference call or webcast following the release of its earnings information nor provide financial guidance. To access the fourth quarter results and other financial information, please visit http://investors.motorola.com.

Consolidated GAAP Results

A comparison of results from operations is as follows:

	Fourth Quarter			Full Year
(In millions, except per share amounts)	2011	2010		2011	2010
Net revenues	$3,436	$3,425		$13,064	$11,460
Gross margin	854	915		3,317	2,965
Operating earnings (loss)	(78)	126		(142)	76
Earnings (loss) before income taxes	(78)	110		(148)	(4)
Net earnings (loss) attributable to Motorola Mobility Holdings, Inc.	($80)	$80		($249)	($86)
Basic earnings (loss) per common share *	($0.27)	$0.27		($0.84)	($0.29)
Diluted loss per common share*	($0.27)	N/A		($0.84)	N/A
Weighted average common shares outstanding
Basic	300.2	294.3		297.1	294.3
Diluted	300.2	N/A		297.1	N/A

Non-GAAP Adjustments for fourth quarter and full year 2011 and 2010

	Fourth Quarter
Per Share Impact	2011	2010
GAAP Earnings (Loss) per Common Share *	($0.27)	$0.27
Merger-related costs**	0.22	——
Reorganization of business charges	0.09	0.06
Stock-based compensation expense	0.12	0.14
Intangible assets amortization expense	0.04	0.05
Joint venture wind-down costs	——	0.03
IP settlement	——	(0.19)
Total Non-GAAP Adjustments ***	0.47	0.10
Non-GAAP Earnings per Common Share *	$0.20	$0.37

	Full Year
Per Share Impact	2011	2010
GAAP Loss per Common Share *	($0.84)	($0.29)
Merger-related costs**	0.28	——
Reorganization of business charges	0.09	0.20
Stock-based compensation expense	0.52	0.55
Intangible assets amortization expense	0.20	0.19
Legal claim provision	0.07	——
Joint venture wind-down costs	——	0.03
Legal settlement	——	(0.77)
IP settlement	——	(0.19)
Total Non-GAAP Adjustments ***	1.16	0.01
Non-GAAP Earnings (Loss) per Common Share *	$0.33	($0.28)

Best-Ever Mobile Broadband Sales and Strong Cash Flows Highlight AT&T’s Fourth-Quarter Results; Stock Buyback Begins on Previous 300 Million Share Authorization

2012 Outlook: Solid Revenue, Margins and Earnings Growth with Strong Free Cash Flow

Dallas, Texas, January 26, 2012

• $(1.12) diluted EPS in fourth quarter compared to $0.18 diluted EPS in the year-ago period. Excluding significant items for both quarters, EPS of $0.42 compared to $0.55 in the year-ago quarter, driven by the company’s best-ever quarter for smartphone activations — up nearly 60 percent year over year
• Consolidated revenues of $32.5 billion, up $1.1 billion, or 3.6 percent, versus the year-earlier period
• In 2011, AT&T’s growth engines — wireless, wireline data and managed services — represented 76 percent of total revenues and grew 7.5 percent versus 2010, led in the fourth quarter by:
  • 10.0 percent growth in wireless revenues
  • 19.4 percent growth in wireless data revenues, up $956 million versus the year-earlier quarter
  • 16.4 percent growth in strategic business services revenues
  • 43.7 percent growth in consumer U-verse revenues
• 9.4 million smartphone sales, best-ever quarter and 50 percent more than previous quarterly record and nearly double 3Q11 sales; 82 percent of postpaid sales were smartphones
• 717,000 wireless postpaid net adds, the largest increase in five quarters; 2.5 million increase in total net wireless subscribers, with gains in every customer category
• Best-ever quarter for Android and Apple smartphones, including 7.6 million iPhone activations
• 571,000 branded computing device (tablets, aircards, etc.) sales, best-ever quarter to reach 5.1 million total subscribers; up almost 70 percent from a year ago
• 12th consecutive quarter with a year-over-year increase in postpaid wireless subscriber ARPU (average monthly revenues per subscriber), up 1.4 percent to $63.76 — more than $6 higher than nearest competitor’s ARPU
• Second consecutive quarter of sequential growth in wireline business revenues
• Sixth consecutive quarter of year-over-year growth in wireline consumer revenues, driven by AT&T U-verse^® services
• 208,000 net gain in AT&T U-verse TV subscribers to reach 3.8 million in service, with continued high broadband and voice attach rates

AT&T Inc. (NYSE:T) today reported fourth-quarter results highlighted by record sales, strong wireless network performance and improved wireline revenue trends.

“We had a tremendous year in terms of execution, and we have excellent momentum across our growth platforms,” said Randall Stephenson, AT&T chairman and chief executive officer.”This was a blowout quarter for sales. Our network performance is at a high level on voice quality and best-in-class mobile download speeds. Sales continue to be strong and business revenue trends are on a good track.

“Looking ahead, we start 2012 with the best visibility we’ve had in some time, and we’re well positioned to deliver solid results — including continued revenue growth with margin expansion, solid earnings per share growth and strong cash flow,” Stephenson said.”In short order, we will begin share repurchases to deliver significant value to our owners.”

Fourth-Quarter Financial Results
For the quarter ended December 31, 2011, AT&T’s consolidated revenues totaled $32.5 billion, up $1.1 billion, or 3.6 percent, versus the year-earlier quarter.

Compared with the fourth quarter of 2010, operating expenses were $41.5 billion versus $29.3 billion; operating loss was $9.0 billion, compared to operating income of $2.1 billion; and AT&T’s operating income margin was (27.7) percent, compared to 6.7 percent. Excluding fourth-quarter significant items, operating expenses were $28.1 billion versus $25.8 billion; operating income was $4.4 billion, compared to $5.6 billion; and operating income margin was 13.5 percent, compared to 17.7 percent.

Fourth-quarter 2011 net income attributable to AT&T totaled $(6.7) billion, or $(1.12) per diluted share. Excluding significant non-cash charges of $0.65 from the actuarial loss on benefit plans and $0.48 for directory asset impairments, along with a one-time charge of $0.44 for termination of the T-Mobile USA acquisition and a one-time gain of $0.03 from a tax settlement, adjusted earnings per share was $0.42.

(The actuarial loss on benefit plans was driven by a reduction in the discount rate from 5.8 percent to 5.3 percent. While our investment returns were better than the overall market, they were less than expectations; this was largely offset by better-than-expected force and medical cost management. The directory asset impairment resulted from an annual review of intangible assets compared to fair value.)

These results compare with reported net income attributable to AT&T of $1.1 billion, or $0.18 per diluted share, in the fourth quarter of 2010. Excluding significant items, earnings per share for the fourth quarter of 2010 was $0.55 per diluted share.

Fourth-quarter 2011 cash from operating activities totaled $7.5 billion, and capital expenditures totaled $5.5 billion. Also included in the fourth quarter, the company made a $1.0 billion contribution to the company’s pension fund. No additional funding is required in 2012. Free cash flow — cash from operating activities minus capital expenditures — totaled $2.0 billion.

Full-Year Results
For the full year 2011, compared with 2010 results, AT&T’s consolidated revenues totaled $126.7 billion versus $124.3 billion, up 2.0 percent; operating expenses were $117.5 billion, compared with $104.7 billion; net income attributable to AT&T was $3.9 billion versus $19.9 billion; and earnings per diluted share was $0.66 compared with $3.35. Excluding significant items, earnings per share totaled $2.20, compared with $2.29.

Compared with 2010 results, AT&T’s full-year cash from operating activities totaled $34.6 billion, down from $35.0 billion. Capital expenditures, including capitalized interest, totaled $20.3 billion versus $20.3 billion, including a 6.4 percent increase in wireless-related capital investment versus 2010, as AT&T aggressively deployed next-generation mobile broadband networks. Free cash flow totaled $14.4 billion, compared with $14.7 billion.

Outlook
AT&T is well positioned to deliver solid revenue and earnings growth with improving margins while returning substantial value to shareowners. In 2012, AT&T expects continued consolidated revenue growth, including postpaid wireless ARPU growth around 2 percent for the year. The company also expects to expand consolidated and wireless margins while keeping wireline margins stable. Achieving these targets will lead to mid-single-digit or better earnings growth with an opportunity to accelerate earnings growth beyond 2012. Outlook excludes any significant items. Importantly, little economic lift is assumed with these expectations.

AT&T expects capital expenditures to be about $20 billion, stable with 2011, as increases in wireless spending offset declines in wireline capital expenditures. The company also expects strong free cash flow, with full-year free cash flow in the $15 to $16 billion range, and plans to begin execution of its existing 300 million share repurchase authorization immediately.

WIRELESS OPERATIONAL HIGHLIGHTS
Record-setting mobile broadband sales and the company’s best postpaid subscriber growth in five quarters drove double-digit wireless revenue growth. AT&T continues to lead the industry in smartphone penetration, mobile broadband sales and postpaid ARPU. Highlights included:

Best Postpaid Growth in Five Quarters. AT&T posted a net increase in total wireless subscribers of 2.5 million in the fourth quarter to reach 103.2 million in service. This included gains in every customer category. Subscriber additions for the quarter include postpaid net adds of 717,000, the best gain in five quarters. Prepaid net adds were 159,000, connected device net adds were 1,029,000 and reseller net adds were 592,000. Fourth-quarter net adds reflect accelerated adoption of smartphones, including the October launch of iPhone 4S, increases in prepaid and reseller subscribers and sales of tablets and connected devices such as automobile monitoring systems, security systems and a host of other emerging products.

Record Quarter for Smartphone Sales. AT&T delivered its best-ever smartphone sales quarter — up nearly 60 percent from the year-ago period. (Smartphones are devices with voice and data capabilities and an advanced operating system to better manage data and Internet access.) In the fourth quarter, the company set a new record with 9.4 million smartphones sold, nearly double the number sold in the third quarter and 50 percent more than the previous quarterly record. Fourth-quarter smartphone sales represented more than 80 percent of postpaid device sales. Both iPhone and Android device sales set records. During the quarter, more than 7.6 million iPhones were activated, the majority of which were iPhone 4S, which went on sale Oct. 14, and more than twice as many Android smartphones were sold versus the fourth quarter a year ago. iPhone sales were helped by a superior customer experience, with AT&T delivering download speeds up to three-times faster than on other U.S. carriers’ networks.

At the end of the quarter, 56.8 percent of AT&T’s 69.3 million postpaid subscribers had smartphones, up from 42.7 percent a year earlier and 32.8 percent two years ago. The average ARPU for smartphones on AT&T’s network is 1.9 times that of the company’s non-smartphone devices. About 87 percent of smartphone subscribers are on FamilyTalk^® or business plans. Churn levels for these subscribers are significantly lower than for other postpaid subscribers.

Best-Ever Quarter for Branded Computing Device Sales. AT&T had its best sales quarter ever for branded computing subscribers, a new growth area for the company that includes tablets, aircards, mobile devices, tethering plans and other data-only devices. AT&T added 571,000 of these devices to reach 5.1 million, an almost 70 percent increase in total subscribers from a year ago. Most of those new subscribers were tablets, with 311,000 added in the quarter, more than half of which were postpaid.

Double-Digit Growth for Wireless Revenues. Total wireless revenues, which include equipment sales, were up 10.0 percent year over year to $16.7 billion. Wireless service revenues increased 4.0 percent, to $14.3 billion, in the fourth quarter.

Wireless Data Revenues Increase 19.4 Percent. Wireless data revenues — driven by Internet access, access to applications, messaging and related services — increased by $956 million, or 19.4 percent, from the year-earlier quarter to $5.9 billion. AT&T’s postpaid wireless subscribers on monthly data plans increased by 16.4 percent over the past year. The number of subscribers on tiered data plans also continues to increase. About 22 million, or 56 percent, of all smartphone subscribers are on tiered data plans, and about 70 percent have chosen the higher-tier plans.

Industry-Leading Postpaid ARPU Continues Growth. Driven by strong data growth, postpaid subscriber ARPU increased 1.4 percent versus the year-earlier quarter to $63.76. This marked the 12th consecutive quarter AT&T has posted a year-over-year increase in postpaid ARPU. AT&T continues to lead the industry with postpaid subscriber ARPU about $6 higher than the nearest competitor. Postpaid data ARPU reached $26.01, up 14.9 percent versus the year-earlier quarter.

Postpaid Churn Up Only Slightly. Despite record smartphone sales and the first holiday sales period since the loss of AT&T’s iPhone exclusivity, postpaid churn was up only slightly at 1.21 percent, compared to 1.15 percent in both the year-ago fourth quarter and in the third quarter of 2011. Total churn was up slightly at 1.39 percent versus 1.32 percent in the fourth quarter of 2010 and 1.28 percent in the third quarter of 2011.

Wireless Margins Reflect Record Sales. Fourth-quarter wireless margins reflect record-setting smartphone sales and customer upgrade levels. This was offset in part by improved operating efficiencies and further revenue gains from the company’s growing base of high-quality smartphone subscribers.

AT&T’s fourth-quarter wireless operating income margin was 15.2 percent versus 22.9 percent in the year-earlier quarter, and AT&T’s wireless EBITDA service margin was 28.7 percent, compared with 37.6 percent in the fourth quarter of 2010. (EBITDA service margin is earnings before interest, taxes, depreciation and amortization, divided by total service revenues.) Fourth-quarter wireless operating expenses totaled $14.2 billion, up 20.9 percent versus the year-earlier quarter, and wireless operating income was $2.5 billion, down 27.0 percent year over year.

WIRELINE OPERATIONAL HIGHLIGHTS
AT&T’s fourth-quarter wireline results were highlighted by the second consecutive quarter of sequential wireline business revenue growth, a 44 percent increase in U-verse revenues and solid cost management:

Sequential Wireline Business Revenue Growth Continues. Total business revenues grew sequentially for the second consecutive quarter. Revenues were $9.3 billion, down 1.4 percent versus the year-earlier quarter but a slight increase over the third quarter of 2011. The year-over-year decline reflects economic conditions and weakness in voice and legacy data products somewhat offset by growth in IP data. Business service revenues, which exclude CPE, declined 1.2 percent year over year, compared to a year-over-year decline of 4.3 percent in the year-ago quarter and were essentially flat sequentially, despite fewer business days in the fourth quarter.

Robust Strategic Business Services Revenues. Revenues from the new-generation capabilities that lead AT&T’s most advanced business solutions — including Ethernet, VPNs, hosting, IP conferencing and — grew 16.4 percent versus the year-earlier quarter, continuing strong trends in this area. This now represents a nearly $6 billion annualized revenue stream.

VPN Growth Drives Business IP Revenues. Total business IP data revenues grew 9.2 percent versus the year-earlier fourth quarter, led by growth in VPN revenues. IP-based solutions allow customers to easily add managed services such as network security, cloud services and IP conferencing on top of their infrastructures. Total business data revenues grew 1.3 percent year over year.

Wireline Consumer Revenues Continue Growth. Driven by strength in IP data services, revenues from residential customers totaled $5.3 billion, an increase of 0.5 percent versus the fourth quarter a year ago. The fourth quarter marked the sixth consecutive quarter of year-over-year growth.

208,000 U-verse Net Adds. AT&T U-verse TV added 208,000 subscribers to reach 3.8 million in service. As U-verse scales, its margins improve, contributing to profitability. In the fourth quarter, the AT&T U-verse High Speed Internet attach rate was 90 percent and about half of new subscribers took AT&T U-verse Voice. About three-fourths of AT&T U-verse TV subscribers have a triple- or quad-play option from AT&T. ARPU for U-verse triple-play customers was almost $170, up 2.5 percent year over year.

AT&T’s U-verse deployment has reached its goal of passing 30 million living units. Companywide penetration of eligible living units continues to grow and was at 15.9 percent in the fourth quarter, and 25.0 percent across areas marketed to for 36 months or more. AT&T’s total video subscribers, which combine the company’s U-verse and bundled satellite customers, reached 5.6 million at the end of the quarter, representing 23.9 percent of households served.

U-verse Broadband Continues Strong Growth. AT&T U-verse High Speed Internet delivered a fourth-quarter net gain of 587,000 subscribers to reach a total of 5.2 million, helping offset losses from DSL. Overall, AT&T lost 49,000 wireline broadband connections. About 74 percent of consumers have a broadband plan delivering speeds of 3 Mbps or higher versus 65 percent in the year-ago quarter.

U-verse Drives Consumer Revenue Transformation. U-verse continues to drive a transformation in wireline consumer, reflected by the fact that consumer IP revenues now represent 53.2 percent of wireline consumer revenues, up from 45.0 percent in the year-earlier quarter. Increased AT&T U-verse penetration and a significant number of subscribers on triple- or quad-play options drove 18.7 percent year-over-year growth in IP revenues from residential customers (broadband, U-verse TV and U-verse Voice) and 4.3 percent sequential growth. U-verse revenues grew 43.7 percent compared with the year-ago fourth quarter and were up 8.6 percent versus the third quarter of 2011.

Growth in Revenues Per Household Continues. Wireline revenues per household served increased 7.0 percent versus the year-earlier fourth quarter and were up 2.3 percent sequentially (average revenues per household is total wireline consumer revenues divided by the average monthly households in service), driven by AT&T U-verse services. This marked AT&T’s 16th consecutive quarter with year-over-year growth in wireline consumer revenues per household as U-verse scales and represents a larger portion of this category.

Consumer Connection Trends. In the fourth quarter, AT&T posted a decline in total consumer revenue connections primarily due to expected declines in traditional voice access lines, consistent with broader industry trends and somewhat offset by increases in U-verse TV and VoIP (Voice over Internet Protocol) connections. AT&T U-verse Voice connections increased by 136,000 in the quarter and 598,000 over the past four quarters. Total consumer revenue connections at the end of the fourth quarter were 41.3 million, compared with 43.4 million at the end of the fourth quarter of 2010 and 41.9 million at the end of the third quarter of 2011.

Wireline Revenues Down Slightly. Total fourth-quarter wireline revenues were $14.9 billion, down 1.4 percent versus the year-earlier quarter and down slightly sequentially. Fourth-quarter wireline operating expenses were $13.1 billion, down 0.2 percent versus the fourth quarter of 2010 and down 0.1 percent sequentially. Wireline operating income totaled $1.8 billion, down from $2.0 billion in the fourth quarter of 2010 and down versus the third quarter of 2011. AT&T’s fourth-quarter wireline operating income margin was 11.9 percent, compared to 13.0 percent in the year-earlier quarter and down slightly from 12.1 percent in the third quarter of 2011. Improved consumer and business IP data revenue trends and execution of cost initiatives helped to partially offset declines in voice revenues.

 

Netflix on Wednesday announced its earnings for the fourth quarter of 2011. The company noted $876 million in revenue, up 47% from the same quarter last year, and earnings per share of $0.73. Analysts had pegged the company to report revenue in the ballpark of $857.4 million and EPS of $0.54, Barron’s relayed. Netflix also said it added 220,000 new subscribers, a far cry from the 800,000 it lost during the third quarter, and now serves 21.67 million streaming customers in the United States. The company has 24.4 million U.S. customers signed up for DVD subscriptions and that figure jumped by 610,000 during the quarter.

Netflix serves 1.9 million international streaming customers and added 380,000 new subs during the quarter. “We are encouraged by the strength in acquisition that we are seeing, coupled with continued improvements in retention among our domestic streaming members,” the company said in a statement. “For Q1 to date, our domestic net additions for streaming are tracking close to our net additions in Q1 2010 of 1.7 million net additions. Given this trend, we are comfortable with our ability to continue to expand our domestic streaming contribution margin.”

Yahoo has frozen its hiring process and may even consider layoffs according to a new report. The news was revealed by AllThingsD on Thursday, which wrote that the choices were made ahead of expected weak fourth quarter earnings. Yahoo isn’t considering mass layoffs, however; instead, AllThingsD said they are likely to be “small and selective” if they happen at all. Yahoo experienced a bit of turmoil earlier this week when co-founder, former CEO and board member Jerry Yang resigned from the company. AllThingsD said other board members may be considering leaving the company, too. Yahoo will report its fourth quarter earnings next Tuesday.

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MetroPCS on Thursday announced its fourth quarter 2011 subscriber results. The carrier added 197,000 net subscribers, which missed analyst expectations that the carrier would add between 214,000 and 250,000 net customer additions, Reuters said. The company stated that it ended the year with more than 9.3 million total subscribers and said it added about 1.2 million subscribers during the 2011 calendar year. Churn took a turn for the worse since the fourth quarter of 2010, however; the company reported 3.7% churn in the fourth quarter, up from 3.5% during the same period in 2010. That figure is an improvement over the 4.5% churn the carrier reported during the third quarter of 2011, however. MetroPCS’s full press release follows after the break. 

MetroPCS Releases Fourth Quarter 2011 Subscriber Results

Fourth Quarter 2011 Subscriber Highlights Include:
Consolidated net subscriber additions of 197 thousand and approximately 1.2 million for the fourth quarter 2011 and full year 2011, respectively

Quarterly churn of 3.7%, a sequential decrease of 80bps from the third quarter of 2011, and an increase of 20bps from the fourth quarter of 2010

Serve over 9.3 million subscribers, an increase of approximately 1.2 million subscribers or 15%, from the fourth quarter of 2010

DALLAS–(BUSINESS WIRE)–Jan. 5, 2012– MetroPCS Communications, Inc. (NYSE: PCS), the nation’s leading provider of no annual contract, unlimited, flat-rate wireless communications service, today announced selected subscriber information for the quarter and year ended December 31, 2011.

In the fourth quarter of 2011, MetroPCS reported gross additions of approximately 1.22 million subscribers, which represents a 7% increase over the fourth quarter of 2010. The Company ended the fourth quarter of 2011 with over 9.3 million subscribers, which includes net additions during the quarter of 197 thousand subscribers. MetroPCS added approximately 1.2 million subscribers during the twelve months ended December 31, 2011. Churn for the fourth quarter of 2011 was 3.7% compared to 3.5% in the fourth quarter of 2010 and down from 4.5% in the third quarter of 2011. The decrease in churn from the third quarter of 2011 was primarily driven by normal seasonal effects related to traditional retail selling periods, as well as improved network performance resulting from the investment in our CDMA network to meet increased data demands.

“We reported solid subscriber growth in the fourth quarter, adding 197 thousand net subscriber additions, marking the sixth consecutive year in which we have added over 1 million net subscriber additions. We were also pleased with our fourth quarter churn of 3.7% representing a significant sequential decrease,” said Roger D. Linquist, Chairman and Chief Executive Officer of MetroPCS.

Subscriber Metrics
Three Months Ended     Three Months Ended     Twelve Months Ended     Twelve Months Ended
December 31, 2011 December 31, 2010 December 31, 2011 December 31, 2010

Consolidated Subscribers
End of Period 9,346,659 8,155,110 9,346,659 8,155,110

Net Additions 197,410 297,726 1,191,549 1,515,586

Churn 3.7 % 3.5 % 3.8 % 3.6 %

The subscriber results for the fourth quarter of 2011 and the twelve months ended December 31, 2011 may not be reflective of subscriber results for any subsequent period.

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Netflix announced on Wednesday that its streaming subscribers around the world watched more than 2 billion hours of video during the fourth quarter of 2011. The company also said it served more than 20 million streaming subscribers during the quarter. “We were thrilled to deliver more than two billion hours of TV shows and movies across 45 countries in the fourth quarter,” said Netflix Co-Founder and CEO Reed Hastings. “Netflix delights members by giving them choice, convenience and control over the entertainment they love for an incredibly low price.” The company lost 800,000 customers during the third quarter when it upset customers by raising its prices and then confused them with a short-lived attempt at a DVD rental spinoff business called Qwikster. Netflix is set to debut its original series “Lilyhammer” on February 6th and fresh content, such as Drive, Hugo, Captain America and Margin Call, will be available to customers in the coming months. The full Netflix announcement follows after the break.

Netflix Members Enjoy More Than Two Billion Hours of Movies and TV Shows in Fourth Quarter

With More U.S. Members Watching Instantly, and Aided by Global Expansion, Netflix Streaming Hours Grew Dramatically in 2011
Jan 4, 2012

LOS GATOS, Calif., Jan. 4, 2012 /PRNewswire/ – Netflix Inc. (Nasdaq: NFLX) said today its members instantly watched more than two billion hours of TV shows and movies streaming from Netflix in the fourth quarter of 2011.

With more than 20 million streaming members globally, Netflix has revolutionized entertainment by allowing people to enjoy TV shows and movies when, where and how they want with a click of a remote, mouse or the touch of a screen.

“We were thrilled to deliver more than two billion hours of TV shows and movies across 45 countries in the fourth quarter,” said Netflix Co-Founder and CEO Reed Hastings. “Netflix delights members by giving them choice, convenience and control over the entertainment they love for an incredibly low price.”

Throughout 2011, Netflix continued to add to its already expansive variety of TV shows and movies in the United States, signing new multi-year agreements with CBS, Twentieth Century Fox, Lionsgate, Miramax, Open Road Films, NBCUniversal, Dreamworks Animation, MGM and the Disney-ABC Television Group among others, and announcing the creation of the highly-anticipated Netflix original series “House of Cards,” a gripping political thriller from Executive Producer David Fincher and starring two-time Academy Award winning actor Kevin Spacey.

Another Netflix original, “Lilyhammer,” starring Steven Van Zandt of “The Sopranos” and Bruce Springsteen’s E Street Band, as a New York gangster in Norway, premieres on Netflix in the U.S., Canada and Latin America on February 6.

“In the coming months, Netflix members can enjoy complete seasons of great TV series from all the major networks and most branded cable channels as well as fantastic films like Drive, Hugo, Captain America and Margin Call,” said Netflix Chief Content Officer Ted Sarandos. “The more great TV shows and movies Netflix adds, the more people watch.”

HTC said it will launch a number of new and competitive smartphone models, including a fresh batch of LTE devices in the United States, to help it end its fourth quarter slump. The company recently revised its outlook for the fourth quarter and said revenue would be flat, a move that came as a surprise to investors used to a company that had previously seen six consecutive months of record revenue leading up to October. HTC was the first company to launch an Android smartphone in the United States, the first to launch a WiMAX smartphone on Sprint and the first to sell a 4G LTE device on Verizon Wireless. “We will focus on the product next year, better and more competitive,” HTC’s chief financial officer Winston Yung told Reuters, noting that the situation isn’t that serious. “Other than new LTE phones for the U.S. market, we also have phones for the global market. We will launch some worldwide flagship products. We’re confident in them. We have six quarters of improvement, the most conservative guidance is 45 million units of shipments this year, a lot higher than 25 million last year.”

Citigroup blamed the weak fourth quarter sales on “inferior products” that weren’t able to keep up with Samsung’s Galaxy S II and Apple’s iPhone family. Additionally, investors aren’t so sure that HTC can maintain the innovation that has made its past phones so attractive. “More foreign investors are still selling HTC as the company doesn’t have many bets in hand,” Masterlink Investment Advisory vice president Tom Tang told Reuters. ”And unlike last time [the company was in this position], HTC didn’t make a share buyback plan this time.”

HTC’s ongoing lawsuits will not help the situation, either. The company recently said that it will not appeal a 2009 ruling that gave IPCom the winning hand in a patent lawsuit. The decision could result in a German injunction against sales of HTC’s smartphones, which could hurt sales during the holiday season.

BGR recently reported exclusive details surrounding two upcoming HTC smartphones — the HTC Ville and HTC Edge — both of which are expected to be unveiled at Mobile World Congress in Barcelona, Spain in February.

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Asus will launch as many as six Ultrabooks in October, Asus chairman Jonney Shih said on Monday. The notebooks will offer screen sizes between 11.6-inches and 13.3-inches. Intel detailed its plans to introduce a new category of notebooks, which it dubbed “Ultrabooks” in May. The chip maker hopes the new category will dominate 40% of the consumer notebook market by the end of 2012 and says the devices will combine the performance of today’s laptops with a tablet-like experience. Earlier reports suggested that mass production of Ultrabooks will begin in September and Intel recently invested $300 million in an effort to speed up the process of creating the devices. The first such device to hit the market is largely expected to be the ASUS UX21. Acer, Asus and Lenovo have all detailed plans to launch sub-$1,000 Ultrabooks during the fourth quarter but Shih said the six from Asus will be priced between $900 and $2,000.

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HTC’s 10-inch Puccini Android tablet will hit the market in September or October, HTC’s chief financial officer Winston Yung said during a press conference at the Taiwan Stock Exchange. We published the first solid images of the Puccini in July when we noted the tablet will likely offer a 1.5GHz processor, an 8-megapixel camera and stylus input support similar to what the HTC Flyer offers. While earlier rumors suggested the Puccini would launch on AT&T with 4G LTE support, we think the September/October time frame might be too early for that to happen. We expect the Puccini to run on AT&T’s HSPA+ network instead. Yung also reaffirmed HTC’s plans to appeal a recent ITC ruling that found HTC guilty of infringing on Apple patents.

[Via DigiTimes]

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Acer, ASUS and Lenovo will launch Intel-powered “Ultrabooks” priced below $1,000 during the fourth quarter of this year, Intel’s executive vice president Sean Maloney said during an event in Taipei. Several of Intel’s other partners aren’t as sure they will be able to hit that price target. DigiTimes said the bill of materials to build an 11.6-inch Ultrabook exceeds $700, which doesn’t leave a lot of room for profits. However, Intel did recently announced that it will invest $300 million in its Ultrabook initiative during the next three to four years, which could be used to offer manufacturers a subsidy per unit for marketing efforts. That, in turn, might help Intel’s partners keep their devices priced below $1,000. Intel hopes its new Ultrabooks will grab a 40% share of the notebook market by the end of 2012.

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Sprint’s head of business markets Paget Alves recently confirmed to CNET that the carrier will launch cloud-based services during the fourth quarter of this year. The offering will be available to small and medium sized business customers. Sprint will provide security, software and Internet hosting, and it will also offer an “infrastructure as a service” option, Alves told CNET. “The telcos are in a unique position because our business is centered around the cloud,” Alves said. “There’s quite a bit of demand. It’s the [number one] topic of conversation with [chief information officers].” Other carriers are also working on cloud-based services; in April, Verizon Wireless acquired cloud and managed IT infrastructure leader Terremark Worldwide for $1.4 billion.

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Chinese consumer electronics company ZTE exploded from the “other” category in the fourth quarter of 2010 to displace Apple as the No. 4 cell phone maker in the world. In doing so, the Chinese manufacturer also bumped RIM off of the top 5 list for the quarter and, more alarmingly perhaps, for the full year. Market analysis firm IDC on Thursday issued its data for the final quarter of 2010 and ZTE was without question the biggest shock. Growing 76.8% year-over-year, ZTE shipped 16.8 million cell phones in the fourth quarter, compared to 9.5 million in the same quarter a year prior. Apple bested ZTE’s growth, ballooning by 86.2% year-over-year, but fourth quarter shipments slid in at 16.2 million units. Apple blew past RIM in the third quarter of 2010 as the company finally broke into the top 5 thanks to explosive iPhone sales. RIM now finds itself in the troubling “other” category — a position it will fight to escape using an army of new BlackBerry smartphones in 2011. The cell phone market grew 17.9% overall in the fourth quarter according to IDC. Hit the break for IDC’s full press release, including charts showing the top 5 cell phone companies by shipments in the fourth quarter and full year.

Mobile Phone Market Grows 17.9% in Fourth Quarter, According to IDC

27 Jan 2011

FRAMINGHAM, Mass. Jan. 27, 2010 – The worldwide mobile phone market grew 17.9% in the fourth quarter of 2010 (4Q10), a new quarterly high driven by smartphones. According to the International Data Corporation (IDC) Worldwide Mobile Phone Tracker, vendors shipped 401.4 million units in 4Q10 compared to 340.5 million units in the fourth quarter of 2009. Vendors shipped a total of 1.39 billion units on a cumulative worldwide basis in 2010, up 18.5% from the 1.17 billion units shipped in 2009.

The strong quarterly and annual growth comes after a weak 2009, which saw the market decline by 1.6%. A stronger economy and a wider array of increasingly affordable smartphones helped lift the market to its highest annual growth rate since 2006 when it grew 22.6%.

“The mobile phone market has the wind behind its sails,” said Kevin Restivo, senior research analyst with IDC’s Worldwide Mobile Phone Tracker. “Mobile phone users are eager to swap out older devices for ones that handle data as well as voice, which is driving growth and replacement cycles.”

It’s not just smartphone-focused suppliers that capitalized on the mobile phone market’s renewed growth last year. ZTE, a company that sells primarily lower-cost feature phones in emerging markets, moved into the number 4 position worldwide in 4Q10. It is the first quarter the Chinese handset maker finished among IDC’s Top 5 vendors.

“Change-up among the number four and five vendors could be a regular occurrence this year,” added Ramon Llamas, senior research analyst with IDC’s Mobile Devices Technology and Trends team. “Motorola, Research In Motion, and Sony Ericsson, all vendors with a tight focus on the fast-growing smartphone market who had ranked among the top five worldwide vendors during 2010 are well within striking distance to move back into the top five list.”

Market Outlook

IDC believes the worldwide mobile phone market will be driven largely by smartphone growth through the end of 2014. “Feature phone users looking to do more with their devices will flock to smartphones in the years to come,” noted Restivo. “This trend will help drive smartphone sub-market to grow 43.7% year over year in 2011.”

Regional Analysis

• The Asia/Pacific mobile phone landscape was driven by low-cost and high-end devices in 4Q10. Domestic brands in India like G-Five, Micromax, and Karbonn grew with aggressive advertising and branding activities for entry-level phones, while ZTE and Huawei worked closely with carriers to push low-cost Android smartphones in China. High-end smartphones, however, were equally well-received, resulting in higher shipments from Apple, Samsung, and HTC in 4Q10. Korea had the biggest smartphone appetite accounting for two-thirds of phones shipped in 4Q10, up from one-eighth a year ago.

• In Western Europe, carrier smartphone promotions motivated more users to scrap their feature phones, resulting in strong smartphone sales. The iPhone 4, HTC Desire, Nokia N8, Samsung Galaxy S, and Blackberry 8520, which were among the region’s top sellers, contributed to the overall market’s growth. Consequently, the feature phones experienced their sharpest decline ever. In CEMA, quarterly volumes breached the 70 million unit threshold for the first time, marked by an influx of Chinese and unbranded handsets. Meanwhile, smartphones experienced brisk growth due to falling prices and more Android-powered devices.

• The United States mobile phone market closed out the year with more vendors becoming more active in this space. Market leaders RIM and Apple maintained a healthy lead, while newcomers Dell, Huawei, Kyocera, and Sanyo launched their first smartphones to the U.S. market. In addition, 4G took another step forward with the commercial launch of Verizon Wireless’ LTE network. Similarly, in Canada, the focus was on smartphones. Android-powered devices from multiple players, along with incumbent vendors RIM and Apple, pushed shipment volumes to a new record level.

• In Latin America, sustained user interest in smartphones drove the market, resulting in strong results for Nokia, RIM, and Samsung as well as relative newcomer Huawei. Smartphones, as well as QWERTY-enabled feature phones, helped boost social networking and messaging, two fast-growing trends in the market. Finally, Alcatel and ZTE once again thrived in the inexpensive entry-level device market.

Top Five Mobile Phone Vendors

Nokia overall unit volume slipped 2.4% in the fourth quarter, which the vendor attributed to the “intense competitive” environment and component shortages. The result was lower feature phone shipments. The company did, however, grow smartphone volume by 38% compared to the same prior-year quarter. Nokia launched the C7 and the C6-01 touchscreen smartphones as well as the C3 combination touchscreen & QWERTY device in the fourth quarter. Still, smartphone ASPs dropped 16% on a year-over-year basis.

Samsung reached a new milestone in 4Q10, pushing through the 80 million unit threshold for the first time in the company’s history and improving its profit margins for the second straight quarter. Driving shipment volumes was the continued success of its Galaxy S smartphones, of which the company sold nearly ten million units worldwide for the year. Similarly, Samsung’s mass-market and touch-screen phones earned a strong following in emerging markets.

LG crossed the 30 million unit mark for the quarter, due in part to the success of Optimus One smartphone sales across multiple regions. LG’s smartphone strategy is paying off; the company sold more than a million units in the first month of availability, and newer versions (Optimus 2X, Optimus Black) are expected later this year. Meanwhile, LG’s feature phones comprised the majority of shipments, but an aging portfolio and lower prices within emerging markets left the company vulnerable to the competition.

ZTE finished the quarter in the number four position with shipments steadily spreading from its home country of China to developing regions such as Africa and Latin America. ZTE has also recently made inroads in developed markets such as Western Europe and the U.S. as well as Japan. While most of its shipments have historically concentrated on entry-level and mid-range devices, some of its recent success is directly attributable to its rapidly expanding smartphone line, such as the Android-based Blade and Racer devices. Meanwhile, its S- and C-series entry-level feature phones provided additional competition within emerging markets.

Apple The iPhone maker slipped to the number 5 position despite a record quarter for unit shipments and the departure soon thereafter of CEO Steve Jobs on medical leave. It was the company’s second straight quarter on IDC’s Top 5 list. The iPhone sold particularly well in developed regions of the world, such as North America and Western Europe. Apple, which said it could have sold more iPhones last quarter had it been able to make more, is set to introduce the touchscreen device on Verizon next month.

Top Five Mobile Phone Vendors, Shipments, and Market Share, Q4 2010 (Units in Millions)

Top Five Mobile Phone Vendors, Shipments, and Market Share, 2010 (Units in Millions)

Nokia revealed its third consecutive decline in profits as the struggling cell phone maker reported its fourth-quarter 2010 earnings. Net sales grew 6% year-over-year to €12.65 billion, but operating profit slid 26% from €1.47 billion in the fourth quarter of 2009 to €1.09 billion. Operating profit margin in the company’s Devices and Services division was also down substantially from 15.4% in Q4 2009 to 11.3% in Q4 2010, and Nokia said it expects a further decline in the first quarter of 2011, dropping to between 7% and 10%. Smartphone shipments actually grew to 28.3 million in the fourth quarter, up from 20.8 million in the same quarter in 2009 and 26.5 million sequentially, but the market outgrew Nokia at a truly alarming pace. Despite this growth, Nokia’s share of the global smartphone market slid to 31% from 38% in the previous quarter. “The game has changed from battle of devices to war of ecosystems,” Nokia CEO Stephen Elop said on the company’s earnings call. “Our industry has changed and we have to change faster.” Hit the break for Nokia’s full report.

Nokia Q4 2010 net sales EUR 12.7 billion, non-IFRS EPS EUR 0.22 (reported EPS EUR 0.20) Nokia 2010 net sales EUR 42.4 billion, non-IFRS EPS EUR 0.61 (reported EPS EUR 0.50)

Nokia Board of Directors will propose a dividend of EUR 0.40 per share for 2010 (EUR 0.40 per share for 2009).

Nokia Corporation
Interim Report
January 27, 2011 at 13.00 (CET +1)

This is a summary of the fourth quarter and annual results 2010 interim report published today. The complete fourth quarter and annual results 2010 interim report, including the full year 2010 information and tables, is available athttp://www.nokia.com/results/Nokia_results2010Q4e.pdf. Investors should not rely on summaries of our interim reports only, but should review the complete interim reports with tables.

	Non-IFRS fourth quarter 2010 results1						Non-IFRS full year 2010 results1
EUR million	Q4/2010	Q4/2009	YoY Change	Q3/2010	QoQ Change		2010	2009	YoY Change
Net sales	12 653	11 988	6%	10 271	23%		42 451	40 987	4%
Devices & Services	8 501	8 179	4%	7 174	18%		29 138	27 853	5%
NAVTEQ	309	225	37%	252	23%		1 003	673	49%
Nokia Siemens Networks	3 961	3 625	9%	2 943	35%		12 661	12 574	1%
Operating profit	1 090	1 473	-26%	634	72%		3 204	3 503	-9%
Devices & Services	961	1 257	-24%	750	28%		3 162	3 488	-9%
NAVTEQ	100	54	85%	74	35%		265	121	119%
Nokia Siemens Networks	145	201	-28%	-116			95	28	239%
Operating margin	8.6%	12.3%		6.2%			7.5%	8.5%
Devices & Services	11.3%	15.4%		10.5%			10.9%	12.5%
NAVTEQ	32.4%	24.0%		29.4%			26.4%	18.0%
Nokia Siemens Networks	3.7%	5.5%		-3.9%			0.8%	0.2%
EPS, EUR Diluted	0.22	0.25	-12%	0.14	57%		0.61	0.66	-8%
	Reported fourth quarter 2010 results						Reported full year 2010 results
EUR million	Q4/2010	Q4/2009	YoY Change	Q3/2010	QoQ Change		2010	2009	YoY Change
Net sales	12 651	11 988	6%	10 270	23%		42 446	40 984	4%
Devices & Services	8 499	8 179	4%	7 173	18%		29 134	27 853	5%
NAVTEQ	309	225	37%	252	23%		1 002	670	50%
Nokia Siemens Networks	3 961	3 625	9%	2 943	35%		12 661	12 574	1%
Operating profit	884	1 141	-23%	403	119%		2 070	1 197	73%
Devices & Services	1 018	1 219	-16%	807	26%		3 299	3 314	-0.5%
NAVTEQ	-19	-56		-48			-225	-344
Nokia Siemens Networks	1	17	-94%	-282			-686	-1 639
Operating margin	7.0%	9.5%		3.9%			4.9%	2.9%
Devices & Services	12.0%	14.9%		11.3%			11.3%	11.9%
NAVTEQ	-6.1%	-24.9%		-19.0%			-22.5%	-51.3%
Nokia Siemens Networks	0.0%	0.5%		-9.6%			-5.4%	-13.0%
EPS, EUR Diluted	0.20	0.26	-23%	0.14	43%		0.50	0.24	108%

Note 1 relating to non-IFRS results: Non-IFRS results exclude special items for all periods. In addition, non-IFRS results exclude intangible asset amortization, other purchase price accounting related items and inventory value adjustments arising from i) the formation of Nokia Siemens Networks and ii) all business acquisitions completed after June 30, 2008. More specific information about the exclusions from the non-IFRS results may be found in our complete interim report with tables on pages 3-4, 13-15 and 18 for the quarterly periods and pages 28-30 and 32 for the full year 2010 and 2009.

Nokia believes that these non-IFRS financial measures provide meaningful supplemental information to both management and investors regarding Nokia’s performance by excluding the above-described items that may not be indicative of Nokia’s business operating results. These non-IFRS financial measures should not be viewed in isolation or as substitutes to the equivalent IFRS measure(s), but should be used in conjunction with the most directly comparable IFRS measure(s) in the reported results. A reconciliation of the non-IFRS results to our reported results for Q4 2010 and Q4 2009 as well as for full year 2010 and 2009 can be found in the tables on pages 11, 13-16 and 27-32 of our complete interim report with tables. A reconciliation of our Q3 2010 non-IFRS results can be found on pages 12-13 and 15-19 of our Q3 2010 complete interim report with tables that was published on October 21, 2010.

FOURTH QUARTER 2010 HIGHLIGHTS
- Nokia net sales of EUR 12.7 billion in Q4 2010, up 6% year-on-year and 23% sequentially (flat and up 24% at constant currency).
- Devices & Services net sales of EUR 8.5 billion in Q4 2010, up 4% year-on-year and 18% sequentially (down 3% and up 19% at constant currency).
- Services net sales of EUR 201 million in Q4 2010, up 21% year-on-year and 26% sequentially; billings of EUR 352 million, up 57% year-on-year and 8% sequentially.
- Nokia total mobile device volumes of 123.7 million units in Q4 2010, down 3% year-on-year and up 12% sequentially.

- Nokia converged mobile device (smartphone and mobile computer) volumes of 28.3 million units in Q4 2010, up 36% year-on-year and 7% sequentially.
- Nokia mobile device ASP (including services revenue) of EUR 69 in Q4 2010, up from EUR 64 in Q4 2009 and EUR 65 in Q3 2010.
- Devices & Services gross margin of 29.2% in Q4 2010, down from 34.3% in Q4 2009 and up from 29.0% in Q3 2010.
- Devices & Services non-IFRS operating margin of 11.3% in Q4 2010, down from 15.4% in Q4 2009 and up from 10.5% in Q3 2010.
- NAVTEQ net sales of EUR 309 million in Q4 2010, up 37% year-on-year and 23% sequentially (up 33% and 27% at constant currency).
- Nokia Siemens Networks net sales of EUR 4.0 billion in Q4 2010, up 9% year-on-year and 35% sequentially (up 7% and 37% at constant currency).
- Nokia Siemens Networks non-IFRS operating margin of 3.7% in Q4 2010, down from 5.5% in Q4 2009 and up from -3.9% in Q3 2010.
- Nokia operating cash flow of EUR 2.4 billion and cash generated from operations of EUR 2.5 billion in Q4 2010.
- Total cash and other liquid assets of EUR 12.3 billion and net cash and other liquid assets of EUR 7.0 billion at the end of Q4 2010.
- Nokia taxes continued to be unfavorably impacted by Nokia Siemens Networks taxes as no tax benefits are recognized for certain Nokia Siemens Networks deferred tax items. In Q4 2010, this was more than offset by a favorable profit mix and certain current quarter benefits both in Devices & Services and in Nokia Siemens Networks taxes. If Nokia’s estimated long-term tax rate of 26% had been applied, non-IFRS Nokia EPS would have been approximately 2.5 Euro cents lower in Q4 2010.

FULL YEAR 2010 HIGHLIGHTS
- Based on Nokia’s preliminary estimate, industry mobile device volumes increased 13% in 2010, compared to 2009 (based on Nokia’s revised definition of the industry mobile device market applicable beginning in 2010).
- Based on Nokia’s preliminary market estimate, Nokia’s mobile device volume market share decreased to 32% in 2010, compared to 34% in 2009 (based on Nokia’s revised definition of the industry mobile device market share applicable beginning in 2010).
- Nokia’s estimated mobile device value market share was down slightly in 2010, compared to 2009.
- Nokia’s non-IFRS operating expenses in Devices & Services were approximately EUR 5.6 billion in 2010, compared to EUR 5.8 billion in 2009.
- Devices & Services non-IFRS operating margin was 10.9% in 2010, compared to 12.5% in 2009.
- Based on preliminary estimates, Nokia and Nokia Siemens Networks believe the market for mobile and fixed infrastructure and related services was approximately flat in Euro terms in 2010, compared to 2009.
- Based on preliminary estimates, Nokia and Nokia Siemens Networks believe Nokia Siemens Networks grew slightly faster than the market in Euro terms in 2010, compared to 2009.
- Nokia Siemens Networks non-IFRS operating margin of 0.8% in 2010, compared to 0.2% in 2009.

STEPHEN ELOP, NOKIA CEO:
“In Q4 we delivered solid performance across all three of our businesses, and generated outstanding cash flow. Additionally, growth trends in the mobile devices market continue to be encouraging. Yet, Nokia faces some significant challenges in our competitiveness and our execution. In short, the industry changed, and now it’s time for Nokia to change faster.”

NOKIA OUTLOOK
- Nokia expects Devices & Services net sales to be between EUR 6.8 billion and EUR 7.3 billion in the first quarter 2011.
- Nokia expects its non-IFRS operating margin in Devices & Services to be between 7% and 10% in the first quarter 2011.
- Nokia and Nokia Siemens Networks expect Nokia Siemens Networks’ net sales to be between EUR 2.8 billion and EUR 3.1 billion in the first quarter 2011.
- Nokia and Nokia Siemens Networks expect the non-IFRS operating margin in Nokia Siemens Networks to be between -3% and breakeven in the first quarter 2011.

Nokia will hold a Strategy and Financial Briefing in London on February 11, 2011. In connection with that event, Nokia plans to discuss its strategy and objectives going forward.

FOURTH QUARTER 2010 FINANCIAL HIGHLIGHTS
The non-IFRS results exclusions
Q4 2010 – EUR 206 million (net) consisting of:
- EUR 28 million restructuring charge and other associated items in Nokia Siemens Networks
- EUR 85 million restructuring charges in Devices & Services
- EUR 147 million gain on sale of wireless modem business in Devices & Services
- EUR 116 million of intangible asset amortization and other purchase price accounting related items arising from the formation of Nokia Siemens Networks
- EUR 119 million of intangible asset amortization and other purchase price accounting related items arising from the acquisition of NAVTEQ
- EUR 5 million of intangible assets amortization and other purchase price related items arising from the acquisition of OZ Communications, Novarra and Motally in Devices & Services

Q4 2010 taxes – EUR 52 million non-cash tax benefit from reassessment of recoverability deferred tax assets in Nokia Siemens Networks

Q3 2010 – EUR 231 million (net) consisting of:
- EUR 61 million prior years-related refund of customs duties
- EUR 49 million restructuring charge and other associated items in Nokia Siemens Networks
- EUR 117 million of intangible asset amortization and other purchase price accounting related items arising from the formation of Nokia Siemens Networks
- EUR 122 million of intangible asset amortization and other purchase price accounting related items arising from the acquisition of NAVTEQ
- EUR 4 million of intangible assets amortization and other purchase price related items arising from the acquisition of OZ Communications, Novarra, MetaCarta and Motally in Devices & Services

Q3 2010 taxes – EUR 127 million prior years-related non-cash benefit from Q3 2010 changes in dividend withholding tax legislation in certain jurisdictions with retroactive effects

Q4 2009 – EUR 332 million (net) consisting of:
- EUR 89 million restructuring charge and other one-time items in Nokia Siemens Networks
- EUR 22 million gain on sale of real estate in Nokia Siemens Networks
- EUR 36 million restructuring charge in Devices & Services
- EUR 117 million of intangible asset amortization and other purchase price accounting related items arising from the formation of Nokia Siemens Networks
- EUR 110 million of intangible asset amortization and other purchase price accounting related items arising from the acquisition of NAVTEQ
- EUR 2 million of intangible assets amortization and other purchase price related items arising from the acquisition of OZ Communications in Devices & Services

Q4 2009 taxes – EUR 213 million non-cash positive effect from development and outcome of various prior year items impacting Nokia taxes

Non-IFRS results exclude special items for all periods. In addition, non-IFRS results exclude intangible asset amortization, other purchase price accounting related items and inventory value adjustments arising from i) the formation of Nokia Siemens Networks and ii) all business acquisitions completed after June 30, 2008.

Nokia Group
Nokia’s fourth quarter 2010 net sales increased 6% to EUR 12.7 billion, compared with EUR 12.0 billion in the fourth quarter 2009, and increased 23% compared with EUR 10.3 billion in the third quarter 2010. At constant currency, group net sales would have been flat year-on-year and increased 24% sequentially.

The following chart sets out the year-on-year and sequential growth rates in our net sales on a reported basis and at constant currency for the periods indicated.

FOURTH QUARTER 2010 NET SALES, REPORTED & CONSTANT CURRENCY1
	YoY Change	QoQ Change
Group net sales – reported	6%	23%
Group net sales – constant currency1	0%	24%
Devices & Services net sales – reported	4%	18%
Devices & Services net sales – constant currency1	-3%	19%
NAVTEQ net sales – reported	37%	23%
NAVTEQ net sales – constant currency1	33%	27%
Nokia Siemens Networks net sales – reported	9%	35%
Nokia Siemens Networks net sales – constant currency1	7%	37%

Note 1: Change in net sales at constant currency excludes the impact of changes in exchange rates in comparison to the Euro, our reporting currency.

Nokia’s fourth quarter 2010 reported operating profit was EUR 884 million, compared with an operating profit of EUR 1 141 million in the fourth quarter 2009 and an operating profit of EUR 403 million in the third quarter 2010. Nokia’s fourth quarter 2010 reported operating margin was 7.0%, compared with 9.5% in the fourth quarter 2009 and 3.9% in the third quarter 2010. Nokia’s fourth quarter 2010 non-IFRS operating profit was EUR 1 090 million, compared with EUR 1 473 million in the fourth quarter 2009 and EUR 634 million in the third quarter 2010. Nokia’s fourth quarter 2010 non-IFRS operating margin was 8.6%, compared with 12.3% in the fourth quarter 2009 and 6.2% in the third quarter 2010. The year-on-year decrease in Nokia’s non-IFRS operating margin resulted from a decline in Devices & Services and Nokia Siemens Networks’ non-IFRS operating margins that were only partially offset by an increase in NAVTEQ’s non-IFRS operating margin. The sequential increase in Nokia’s non-IFRS operating margin reflected improved non-IFRS operating margin in all three reportable segments.

The following chart sets out Nokia Group’s cash flow (for the periods indicated) and financial position (at the end of the periods indicated), as well as the year-on-year and sequential growth rates.

NOKIA GROUP CASH FLOW AND FINANCIAL POSITION
EUR million	Q4/2010	Q4/2009	YoY Change	Q3/2010	QoQ Change
Cash generated from operations	2 492	1 288	93%	1 206	107%
Operating cash flow1	2 436	1 535	59%	439	455%
Total cash and other liquid assets	12 275	8 873	38%	10 235	20%
Net cash and other liquid assets2	6 996	3 670	91%	4 375	60%
Net debt-equity ratio (gearing)	-43%	-25%		-29%

Note 1: Net cash from operating activities.
Note 2: Total cash and other liquid assets minus interest-bearing liabilities.

Year-on-year and sequentially, the increase in operating cash flow was primarily driven by net working capital improvements in both Devices & Services and Nokia Siemens Networks. Approximately EUR 600 million of these net working capital improvements were driven by the timing of customer payments and value-added tax refunds, which were received in Q4 2010 instead of subsequent periods. In addition, on a sequential basis, we did not experience the cash outflows related to foreign exchange hedging activities that we had in the third quarter 2010, and our operating cash flow also benefited from improved net profit.

Both total as well as net cash and other liquid assets increased in the fourth quarter 2010 as a result of positive overall cash generation.

Devices & Services
Net Sales. The following chart sets out our Devices & Services net sales for the periods indicated, as well as the year-on-year and sequential growth rates, by category.

DEVICES & SERVICES NET SALES BY CATEGORY
EUR million	Q4/2010	Q4/2009	YoY Change	Q3/2010	QoQ Change
Mobile phones1	4 092	4 294	-5%	3 560	15%
Converged mobile devices2	4 407	3 885	13%	3 613	22%
Total	8 499	8 179	4%	7 173	18%

Note 1: Series 30 and Series 40-based devices ranging from basic mobile phones focused on voice capability to devices with a number of additional functionalities, such as Internet connectivity, including the services and accessories sold with them.
Note 2: Smartphones and mobile computers, including the services and accessories sold with them.

The following chart sets out Devices & Services net sales for the periods indicated, as well as the year-on-year and sequential growth rates, by geographic area.

DEVICES & SERVICES NET SALES BY GEOGRAPHIC AREA
EUR million	Q4/2010	Q4/2009	YoY Change	Q3/2010	QoQ Change
Europe	3 088	3 153	-2%	2 289	35%
Middle East & Africa	1 177	1 148	3%	930	27%
Greater China	1 682	1 243	35%	1 654	2%
Asia-Pacific	1 603	1 783	-10%	1 504	7%
North America	233	257	-9%	226	3%
Latin America	715	595	20%	570	25%
Total	8 499	8 179	4%	7 173	18%

Year-on-year, the 4% net sales increase resulted from higher ASPs partially offset by lower device volumes in most regions.  Our device volumes in the fourth quarter 2010 were adversely affected by shortages of certain components, which we expect to continue to impact our business at least through the end of the first quarter 2011, as well as by a number of supply and logistics challenges driven by the tight component availability during the quarter. Sequentially, the 18% net sales increase reflected higher ASPs, as well as higher device volumes in most regions, partially offset by a number of supply and logistics challenges driven by the tight component availability during the fourth quarter 2010. At constant currency, Devices & Services net sales would have decreased 3% year-on-year and increased 19% sequentially.

Of our total Devices & Services net sales, services contributed EUR 201 million in the fourth quarter 2010, compared with EUR 166 million in the fourth quarter 2009 and EUR 159 million in the third quarter 2010. Services billings in the fourth quarter 2010 were EUR 352 million, compared with EUR 224 million in the fourth quarter 2009 and EUR 325 million in the third quarter 2010.

Volume and Market Share. The following chart sets out our Devices & Services volumes for the periods indicated, as well as the year-on-year and sequential growth rates, by category.

DEVICES & SERVICES MOBILE DEVICE VOLUMES BY CATEGORY
million units	Q4/2010	Q4/2009	YoY Change	Q3/2010	QoQ Change
Mobile phones1	95.4	106.1	-10%	83.9	14%
Converged mobile devices2	28.3	20.8	36%	26.5	7%
Total	123.7	126.9	-3%	110.4	12%

Note 1: Series 30 and Series 40-based devices ranging from basic mobile phones focused on voice capability to devices with a number of additional functionalities, such as Internet connectivity, including the services and accessories sold with them.
Note 2: Smartphones and mobile computers, including the services and accessories sold with them.

In the fourth quarter 2010, the overall industry mobile device volumes were 402 million units, based on Nokia’s preliminary estimate, representing an increase of 12% year-on-year and 11% sequentially. Nokia’s preliminary estimated mobile device market share was 31% in the fourth quarter 2010, down from an estimated 35% in the fourth quarter 2009 and up from an estimated 30% in the third quarter 2010 (based on Nokia’s revised definition of the industry mobile device market share applicable beginning in 2010 and applied retrospectively to 2009 for comparative purposes only).

Of the total industry mobile device volumes, converged mobile device industry volumes in the fourth quarter 2010 increased to 90.5 million units, based on Nokia’s preliminary estimate, representing an increase of 73% year-on-year and 29% sequentially. Nokia’s preliminary estimated share of the converged mobile device market was 31% in the fourth quarter 2010, compared with an estimated 40% in the fourth quarter 2009 and an estimated 38% in the third quarter 2010.

The following chart sets out our mobile device volumes for the periods indicated, as well as the year-on-year and sequential growth rates, by geographic area.

DEVICES & SERVICES MOBILE DEVICE VOLUMES BY GEOGRAPHIC AREA
million units	Q4/2010	Q4/2009	YoY Change	Q3/2010	QoQ Change
Europe	33.5	34.3	-2%	29.2	15%
Middle East & Africa	22.2	24.3	-9%	18.4	21%
Greater China	21.9	17.6	24%	20.2	8%
Asia-Pacific	31.3	34.5	-9%	27.8	13%
North America	2.6	3.8	-32%	3.2	-19%
Latin America	12.2	12.4	-2%	11.6	5%
Total	123.7	126.9	-3%	110.4	12%

Nokia’s 3% year-on-year decrease in global mobile device volumes during the fourth quarter 2010 was driven primarily by the intense competitive environment, as well as certain component shortages and a number of supply and logistics challenges resulting from the tight component availability during the quarter. This volume decline was somewhat offset by a year-on-year improvement in the overall market environment. On a sequential basis, Nokia’s 12% increase in global mobile device volumes was primarily due to increased seasonal demand for our devices offset to some extent by a number of supply and logistics challenges driven by the tight component availability during the fourth quarter 2010.

Average Selling Price. The following chart sets out our Devices & Services ASP for the periods indicated, as well as the year-on-year and sequential growth rates, by category.

DEVICES & SERVICES AVERAGE SELLING PRICE BY CATEGORY
EUR	Q4/2010	Q4/2009	YoY Change	Q3/2010	QoQ Change
Mobile phones1	43	40	6%	42	1%
Converged mobile devices2	156	186	-16%	136	15%
Total	69	64	7%	65	6%

Note 1: Series 30 and Series 40-based devices ranging from basic mobile phones focused on voice capability to devices with a number of additional functionalities, such as Internet connectivity, including the services and accessories sold with them.
Note 2: Smartphones and mobile computers, including the services and accessories sold with them.

The year-on-year 7% increase in our ASP was primarily due to converged mobile devices representing a greater proportion of our overall mobile device sales and the appreciation of certain currencies against the Euro, offset to some extent by general price erosion and a higher proportion of lower-priced converged mobile device sales. On a sequential basis, the 6% increase in our ASP was primarily driven by an increased proportion of sales of higher priced converged mobile devices and foreign exchange hedging, offset to some extent by the depreciation of certain currencies against the Euro. The 17% year-on-year decline in our converged mobile devices ASPs was mainly driven by general price erosion and an increase in the proportion of lower-priced converged mobile devices sales. The 14% sequential increase in our converged mobile devices ASPs was mainly driven by an increased proportion of sales of higher prices converged mobile devices during the fourth quarter 2010.

Profitability. Devices & Services gross profit (reported and non-IFRS) decreased 12% to EUR 2.5 billion, compared with EUR 2.8 billion in the fourth quarter 2009, and increased 19% compared to EUR 2.1 billion in the third quarter 2010. The gross margin (reported and non-IFRS) was 29.2% in the fourth quarter 2010, compared with 34.3% in the fourth quarter 2009 and 29.0% in the third quarter 2010. The year-on-year gross margin decline was primarily due to material cost erosion being less – driven by both shortages of certain components and the appreciation of certain currencies against the Euro – than general product price erosion, as well as a negative impact from foreign exchange hedging. The impact of these factors was offset to some extent by converged mobile devices representing a greater proportion of our overall mobile device volumes. Sequentially, the gross margin increase was primarily due to an increased proportion of sales of higher priced mobile devices and the depreciation of certain currencies against the Euro, offset to a large extent by a negative one-quarter impact from foreign exchange hedging as well as lower royalty income in the fourth quarter 2010. Nokia sees shortages of certain components impacting our business at least through the end of first quarter 2011.

Devices & Services reported operating profit decreased 16% to EUR 1 018 million, compared with EUR 1 219 million in the fourth quarter 2009, and increased 26% compared with EUR 807 million in the third quarter 2010. The reported operating margin was 12.0% in the fourth quarter 2010, compared with 14.9% in the fourth quarter 2009 and 11.3% in the third quarter 2010. Devices & Services non-IFRS operating profit decreased 24% to EUR 961 million compared with EUR 1 257 million in the fourth quarter 2009, and increased 28% compared with EUR 750 million in the third quarter 2010. The non-IFRS operating margin was 11.3% in the fourth quarter 2010, compared with 15.4% in the fourth quarter 2009 and 10.5% in the third quarter 2010. The year-on-year decrease in non-IFRS operating profit was driven primarily by the lower gross margin. Sequentially, the increase in non-IFRS operating profit was primarily due to higher net sales, offset to some extent by higher operating expenses.

NAVTEQ
Net Sales. Fourth quarter 2010 NAVTEQ reported net sales increased 37% year-on-year to EUR 309 million, compared with EUR 225 million in the fourth quarter 2009, and increased 23% compared to EUR 252 million in the third quarter 2010. The year-on-year and sequential increase in reported net sales was primarily driven by improved sales of map licenses to mobile device customers as well as higher navigation uptake rates in the automotive industry. Sequentially, net sales also benefited from a stronger market for personal navigation devices (PNDs). At constant currency, NAVTEQ net sales would have increased 33% year-on-year and 27% sequentially.

Profitability. In the fourth quarter 2010, NAVTEQ’s gross profit (reported and non-IFRS) increased 37% to EUR 271 million, compared with EUR 195 million in the fourth quarter 2009, and increased 27% compared with EUR 213 million in the third quarter 2010. NAVTEQ’s gross margin (reported and non-IFRS) increased to 87.7%, compared to a reported gross margin of 86.7% and a non-IFRS gross margin of 87.1% in the fourth quarter 2009, and 84.5% (reported and non-IFRS) in the third quarter 2010.

In the fourth quarter 2010, NAVTEQ’s reported operating loss decreased to EUR 19 million, compared with a EUR 56 million loss in the fourth quarter 2009 and a EUR 48 million loss in the third quarter 2010. The reported operating margin was -6.1% in the fourth quarter 2010, compared with -24.9% in the fourth quarter 2009 and -19.0% in the third quarter 2010. NAVTEQ’s non-IFRS operating profit was EUR 100 million, compared with EUR 54 million in the fourth quarter 2009 and EUR 74 million in the third quarter 2010.  The non-IFRS operating margin was 32.4% in the fourth quarter 2010, compared with 24.0% in the fourth quarter 2009 and 29.4% in the third quarter 2010. The year-on-year and sequential increase in NAVTEQ’s non-IFRS operating margin was primarily due to higher net sales, offset to some extent by higher operating expenses.

Nokia Siemens Networks
Net Sales. The following chart sets out Nokia Siemens Networks net sales for the periods indicated, as well as the year-on-year and sequential growth rates, by geographic area.

NOKIA SIEMENS NETWORKS NET SALES BY GEOGRAPHIC AREA
EUR million	Q4/2010	Q4/2009	YoY Change	Q3/2010	QoQ Change
Europe	1 357	1 327	2%	1 070	27%
Middle East & Africa	423	371	14%	331	28%
Greater China	508	425	20%	311	63%
Asia-Pacific	978	818	20%	711	38%
North America	226	244	-7%	175	29%
Latin America	469	440	7%	345	36%
Total	3 961	3 625	9%	2 943	35%

The year-on-year 9% increase in net sales was primarily driven by growth in both the product and services businesses in most regions. The sequential 35% increase in net sales was primarily driven by a seasonally stronger infrastructure market in the fourth quarter 2010. Net sales in the fourth quarter 2010 also benefited from an improvement in overall component availability. Of total Nokia Siemens Networks net sales, services contributed EUR 1.8 billion in the fourth quarter 2010, compared to EUR 1.7 billion in the fourth quarter 2009 and EUR 1.4 billion in the third quarter 2010. At constant currency, Nokia Siemens Networks net sales would have increased 7% year-on-year and 37% sequentially.

Profitability. Nokia Siemens Networks reported gross profit decreased 3% to EUR 1 042 million compared with EUR 1 071 million in the fourth quarter 2009, and increased 48% compared with EUR 702 million in the third quarter 2010.  The reported gross margin was 26.3% in the fourth quarter 2010, compared with 29.5% in the fourth quarter 2009 and 23.9% in the third quarter 2010. Nokia Siemens Networks non-IFRS gross profit in the fourth quarter 2010 decreased 6% to EUR 1 045 million compared with EUR 1 108 million in the fourth quarter 2009, and increased 42% compared with EUR 733 million in the third quarter 2010. The non-IFRS gross margin was 26.4% in the fourth quarter 2010, compared with 30.6% in the fourth quarter 2009 and 24.9% in the third quarter 2010.  The lower year-on-year non-IFRS gross margin in the fourth quarter 2010 was primarily due to general price pressure on certain products, a higher proportion of lower margin products in the business mix and to some extent project execution related challenges in the Middle East and Africa. The higher sequential non-IFRS gross margin in the fourth quarter 2010 was primarily due to a more favourable business mix, strong seasonal net sales and the absence of certain items that had a negative impact on the gross margin in the third quarter 2010.

Nokia Siemens Networks fourth quarter 2010 reported operating profit was EUR 1 million, compared with a reported operating profit of EUR 17 million in the fourth quarter 2009 and a reported operating loss of EUR 282 million in the third quarter 2010. The reported operating margin was 0.0% in the fourth quarter 2010, compared with 0.5% in the fourth quarter 2009 and -9.6% in the third quarter 2010. Nokia Siemens Networks non-IFRS operating profit was EUR 145 million in the fourth quarter 2010, compared with a non-IFRS operating profit of EUR 201 million in the fourth quarter 2009 and a non-IFRS operating loss of EUR 116 million in the third quarter 2010.  The non-IFRS operating margin was 3.7% in the fourth quarter 2010, compared with 5.5% in the fourth quarter 2009 and -3.9% in the third quarter 2010. The year-on-year decline in Nokia Siemens Networks non-IFRS operating profit was primarily due to the lower gross margin, which was to some extent offset by higher net sales and lower operating expenses. The sequential increase in Nokia Siemens Networks non-IFRS operating profit was primarily due to higher net sales and gross margin, offset to some extent by higher operating expenses in the fourth quarter 2010.

Q4 2010 OPERATING HIGHLIGHTS
Devices & Services
- Following the start of shipments of the Nokia N8 in the third quarter, Nokia began shipments of two other smartphones based on the new Symbian software: The Nokia C7, a sleek, full-touch smartphone crafted from stainless steel and glass that is designed to appeal especially to social networkers, and the Nokia C6-01, a smaller, full-touch smartphone that features Nokia ClearBlack technology for improved outdoor visibility.
- Nokia started shipments of the Nokia C3 Touch & Type, a stainless steel device which combines the touch screen and traditional phone keypad. 
- Nokia estimates that it became the leader in QWERTY in terms of volume share during the fourth quarter, helped by sales of its affordable QWERTY model, the Nokia C3.
- Nokia continued to develop its Ovi services. Highlights for the quarter included: 
- Store continued to see increased downloads of applications and content. The Store is now attracting more than 4 million downloads a day, compared with more than 2.7 million a day reported in October 2010, boosted by traffic from the new Nokia N8 and Nokia C7, the widespread introduction of operator billing and the increased availability of local applications and content specific to individual markets. According to a study by iResearch published since the end of the quarter, Ovi Store ranks as the leading application store in China by downloads. Other key markets for Ovi Store include Russia and Turkey, where downloads from the Store have reached more than 1 million a week in each market.
- Maps continued to scale, and today includes coverage of 180 countries and regions in total, with 100 of them navigable. Additionally, more than 100 cities around the world have dedicated pedestrian navigation.  With the release of the latest version of Ovi Maps, users can download maps directly to their device over Wi-Fi as well as enjoy mapping that includes public transport lines for subways, trams and trains in more than 80 cities around the world. Nokia N8 owners have quickly become among the most active Maps users, spending up to four hours a month using maps and navigating.
- Life Tools, Nokia’s unique life improvement mobile information services designed especially for emerging markets, was launched in Nigeria, adding Africa’s most populous country to the service which already operates in India, Indonesia and China.
- Nokia announced that it will use Qt technologies to simplify development for both our own and third party developers. In addition, Nokia announced its intention to support HTML5 for the development of Web content and applications.
- Following the withdrawal of other members, the Symbian Foundation, a non-profit entity, transitioned to a licensing operation only and the Symbian platform’s development is now under the control of Nokia.
- In November 2010, Renesas Electronics Corporation completed its acquisition of Nokia’s Wireless Modem business, which was initially announced on July 6, 2010.

NAVTEQ
- NAVTEQ announced its selection by the Federal Communications Commission (FCC) for US map data to support development of a national broadband map.
- NAVTEQ announced an expansion in R&D capabilities with the addition of a Global R&D Center in Mumbai, India.
- NAVTEQ extended its global agreement with ORTEC, also incorporating additional NAVTEQ Traffic Patterns and NAVTEQ Transport content.
- NAVTEQ acquired PixelActive Inc. to accelerate expansion from a 2D to a 3D map and further leverage 3D technologies for all NAVTEQ products.

Nokia Siemens Networks
- Nokia Siemens Networks added three more 3G customers in India, announcing contracts with Idea Cellular, Vodafone Essar and Aircel. 
- Nokia Siemens Networks continued to gain momentum in the emerging network sharing arena. In France Nokia Siemens Networks won a deal to build an enhanced mobile voice and data network in rural France for SFR, which will be shared with two other operators. In the UK Nokia Siemens Networks announced it had supplied more than 12,000 3G base stations to Mobile Broadband Network Ltd (MBNL), bringing improved coverage and capacity for Three and T-Mobile UK customers.
- Nokia Siemens Networks continued to make progress in LTE, announcing contracts with, among others,  Deutsche Telekom in Germany, Elisa in Finland and for  Evolved Packet Core with Tele2 in Sweden. 
- Nokia Siemens Networks secured its first network outsourcing contract in China with Anhui Unicom; Nokia Siemens Networks also announced plans to expand its global services delivery capability with the opening a new Global Network Operations Centre in Brazil.
- NBN Co in Australia awarded Nokia Siemens Networks a contract to supply DWDM optical transport network technology for the national broadband project.
- Nokia Siemens Networks announced it will open a Smart Lab in South Korea, focused on developing smart device-optimized applications, services and networks. The lab will explore the potential of wireless broadband technologies for delivering a superior end-user experience.
- Nokia Siemens Networks has successfully tested a technology that could significantly increase the data carrying capacity of standard copper wires. The company achieved data transmission speeds of 825 megabits per second (Mbps) over 400 meters of bonded copper lines and 750 Mbps over 500 meters using “Phantom DSL” technology.

For more information on the operating highlights mentioned above, please refer to related press announcements at the following links: www.nokia.com/press,www.navteq.com/about/press.html, www.nokiasiemensnetworks.com/press

FORWARD-LOOKING STATEMENTS
It should be noted that certain statements herein which are not historical facts are forward-looking statements, including, without limitation, those regarding: A) the timing of the deliveries of our products and services and their combinations; B) our ability to develop, implement and commercialize new technologies, products and services and their combinations; C) expectations regarding market developments and structural changes; D) expectations and targets regarding our industry volumes, market share, prices, net sales and margins of products and services and their combinations; E) expectations and targets regarding our operational priorities and results of operations; F) the outcome of pending and threatened litigation; G) expectations regarding the successful completion of acquisitions or restructurings on a timely basis and our ability to achieve the financial and operational targets set in connection with any such acquisition or restructuring; and H) statements preceded by “believe,” “expect,” “anticipate,” “foresee,” “target,” “estimate,” “designed,” “plans,” “will” or similar expressions. These statements are based on management’s best assumptions and beliefs in light of the information currently available to it. Because they involve risks and uncertainties, actual results may differ materially from the results that we currently expect. Factors that could cause these differences include, but are not limited to: 1) the competitiveness and quality of our portfolio of products and services and their combinations; 2) our ability to timely and successfully develop or otherwise acquire the appropriate technologies and commercialize them as new advanced products and services and their combinations, including our ability to attract application developers and content providers to develop applications and provide content for use in our devices; 3) our ability to effectively, timely and profitably adapt our business and operations to the requirements of the converged mobile device market and the services market; 4) the intensity of competition in the various markets where we do business and our ability to maintain or improve our market position or respond successfully to changes in the competitive environment; 5) the occurrence of any actual or even alleged defects or other quality, safety or security issues in our products and services and their combinations; 6) the development of the mobile and fixed communications industry and general economic conditions globally and regionally; 7) our ability to successfully manage costs; 8) exchange rate fluctuations, including, in particular, fluctuations between the euro, which is our reporting currency, and the US dollar, the Japanese yen and the Chinese yuan, as well as certain other currencies; 9) the success, financial condition and performance of our suppliers, collaboration partners and customers; 10) our ability to source sufficient amounts of fully functional components, sub-assemblies, software, applications and content without interruption and at acceptable prices and quality; 11) our success in collaboration arrangements with third parties relating to the development of new technologies, products and services, including applications and content; 12) our ability to manage efficiently our manufacturing and logistics, as well as to ensure the quality, safety, security and timely delivery of our products and services and their combinations; 13) our ability to manage our inventory and timely adapt our supply to meet changing demands for our products; 14) our ability to protect the complex technologies, which we or others develop or that we license, from claims that we have infringed third parties’ intellectual property rights, as well as our unrestricted use on commercially acceptable terms of certain technologies in our products and services and their combinations; 15) our ability to protect numerous Nokia, NAVTEQ and Nokia Siemens Networks patented, standardized or proprietary technologies from third-party infringement or actions to invalidate the intellectual property rights of these technologies; 16) the impact of changes in government policies, trade policies, laws or regulations and economic or political turmoil in countries where our assets are located and we do business; 17) any disruption to information technology systems and networks that our operations rely on; 18) our ability to retain, motivate, develop and recruit appropriately skilled employees; 19) unfavorable outcome of litigations; 20) allegations of possible health risks from electromagnetic fields generated by base stations and mobile devices and lawsuits related to them, regardless of merit; 21) our ability to achieve targeted costs reductions and increase profitability in Nokia Siemens Networks and to effectively and timely execute related restructuring measures; 22) developments under large, multi-year contracts or in relation to major customers in the networks infrastructure and related services business; 23) the management of our customer financing exposure, particularly in the networks infrastructure and related services business; 24) whether ongoing or any additional governmental investigations into alleged violations of law by some former employees of Siemens AG (“Siemens”) may involve and affect the carrier-related assets and employees transferred by Siemens to Nokia Siemens Networks; 25) any impairment of Nokia Siemens Networks customer relationships resulting from ongoing or any additional governmental investigations involving the Siemens carrier-related operations transferred to Nokia Siemens Networks; as well as the risk factors specified on pages 11-32 of Nokia’s annual report Form 20-F for the year ended December 31, 2009 under Item 3D. “Risk Factors.” Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements. Nokia does not undertake any obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required.

Nokia, Helsinki – January 27, 2011