nokia q301 Owner's Manual

Conference Call

Third Quarter 2001 Financial Results

Jorma Ollila

Chairman and CEO

Olli-Pekka Kallasvuo

Executive Vice President and CFO

Ulla James

Vice President, Investor Relations

October 19, 2001

15.00 Helsinki time / 08.00 New York time

During this call, we will be making various forward-looking

statements regarding the future business and financial

performance of Nokia and the mobile communications

industry. These statements are predictions that involve

both risks and uncertainties, and actual results may vary

materially. We refer you to pages 10 to 16 of Nokia's Form

20-F, to our previous announcements and to Nokia's press
release issued today regarding some important risk factors

you should consider in evaluating this information.

Nokia - Key Figures (PRO FORMA*)

Net sales (million)

NET
NMP

NVO
Operating profit (million)
Operating margin (%)

NET

NMP

NVO
Net Profit (million)

Q3/2001

EUR

7 050
1 659
5 269

140

1 071

15.2

9.3

19.0

-51.4
760

Q3/2000

EUR

7 575
1 926
5 456

209

1 353

17.9

18.5

19.6

-28.7
923

Change

, %

-7

-14

-3

-33

-21

-18

FY 2000

EUR

30 376

7 714

21 887

854

5 861

19.3

18.1

22.4

-35.9

4 027

EPS, Diluted
Operating Cash Flow (million)

Personnel (end of period)

*Excludes goodwill amortization and non-recurring items

0.16

1 363

56 145

0.19
741

60 048

-16

0.84

3 509

60 289

Goodwill Amortization (in millions)

Nokia Networks

Q3/2001

EUR

-26

Q3/200

0

EUR

-8

Nokia Mobile Phones

-23

-1

Nokia Ventures Organization

-24

-22

Common Group Expenses

-

-

Total Nokia Group

-73

-31

Non-Recurring Items (in millions)

Q3/2001

Nokia Networks
Nokia Mobile Phones
Nokia Ventures Organization
Common Group Expenses
Total Nokia Group

EUR

-714

-

-

-

-714

Q3/200

0

EUR

-

-

-

-

-

FY 2000

EUR

-42

-18

-80

-

-140

FY 2000

EUR

-

-

-

55
55

Strong performance in a challenging

environment

Difficult year for telecommunications

•Turbulent economic environment

•Technology transition from 2G to 3G

Terrorist attacks increase uncertainty over long term

economic development and consumer confidence

Nokia is emphasizing operational flexibility, efficiency,

and profitability

Despite adverse market environment, Nokia

exceeded expectations in terms of profitability and

cash flow

Mobile Phone Market Update

Regional economic weakness and lower subsidies is affecting

global handset demand and replacement market specifically

Approximately 94 million units sold globally in Q3-2001

(sell through)

•~10% decline vs.. Q3-2000

•~4% increase vs. Q2-2001

Strongest protocol growth for market in PDC and CDMA - decline

in TDMA and GSM market volumes

880 million subscribers at the end of Q3-2001

Nokia expects the Q4-2001 volumes to increase sequentially from

Q3-2001 to approximately 110 million units (sell through)

Nokia expects the full year 2001 volumes to reach approximately

390 million units (sell through)

Nokia Mobile Phones in Q3-2001

Sales: ~45% from Europe/Africa, ~24% from APAC, and ~30%

Americas

Strongest regional demand for Nokia in APAC and the U.S. -

weakest in Europe and Latin America

1-9/2001, Nokia market share in excess of 35%

Q3-2001 Nokia market share approximately 34%

Nokia expects a strong increase in market share in Q4-2001

Nokia saw a clear increase in CDMA market share in the U.S.

(global CDMA market share in the double digits)

Nokia Mobile Phones in Q3-2001

Nokia 8310 GPRS phone started shipping as planned by end of Q3-

2001

Nokia 6310 and 8390 (Americas) scheduled for Q4-2001 shipments

Nokia expects our Q4-2001 GPRS market share to be roughly

equivalent to Nokia's total global market share

Packet data, imaging & colour displays will stimulate both handset &

mobile services market growth in 2002

Nokia 5510 - entertainment phone is expected to reach distribution

channels in volumes for holiday sales

Nokia will introduce a wide array of exciting products in the next 12

months

Nokia Mobile Phones in Q3-2001

R&D and brand investments key to long-term competitiveness

Nokia's Q3-2001 ASPs remained unchanged both on sequential

and y-o-y basis

Excellent demand-supply-management has yielded negative

working capital

Low inventory reduces capital requirements, risk of obsolescence

and provides immediate benefit of component pricing reduction

Nokia winning market share - not buying market share

Confident in 40% long term market share

Nokia Networks in Q3-2001

• Reduced investments by some operators lead into lower

than anticipated revenues and profitability in Q3-2001

• Strong growth in Americas - decline in Europe & APAC

• Chinese market continued to show healthy growth

• Sales: ~50% from both Europe/Africa, ~40% from APAC,

and >10% Americas

• Nokia's volume 3G/WCDMA deliveries have started

• Deliveries to more than 20 customers - Nokia expects to

ship close to 4 000 3G base stations in Q4-2001

• French regulator’s decision a positive step

Nokia Networks in Q3-2001

• Actual revenue recognition for 3G deliveries will begin in mid 2002

• 3G deliveries will appear as work-in-progress inventories

• Networks continue to get congested - due to continued subscriber and

usage growth

• In November, Nokia will begin EDGE transceiver shipments

• EDGE offers significant increase in network capacity, throughput and

coverage

• Up to 400 kbps throughput

• Triples the bandwidth efficiency compared to GSM

Vendor Financing and Special Provision

• Total Vendor Financing commitments were ~4.2 billion Euro, of which a

total of ~900 million Euro was drawn end of Q3-2001

• ~800 million Euro on balance sheet long term loan receivables

• ~100 million Euro off balance sheet loan guarantees

• ~3.3 billion Euro commitments not yet drawn

• A provision of 714 million Euro was taken to increase the reserve for

receivables from Telsim and Dolphin

• Telsim: 669 million Euro

• Dolphin: 45 million Euro

3G Market

• Nokia signed 8 new 3G contracts during Q3-2001

• Nokia continues to see the earlier stated 35%

market share in 3G as a realistic medium term target

• TDMA to GSM migration is increasing Nokia's

accessible infrastructure market

• Consolidation and exits by Nokia's competitors open

up new business opportunities for Nokia Networks

Balance sheet & cash flow

• Operating cash flow was 1.4 billion Euro in Q3-2001 (3.9

billion Euro for first nine months of 2001)

• Nokia's gearing improved to -28% (vs. -25% in Q2-2001)

• Net cash position of 3.2 billion Euro in Q3-2001

• 4.3 billion Euro in cash and long-term investments

• Nokia expects to maintain positive operating cash flow

Guidance for Q4-2001 & FY2002

Q4-2001 guidance:

• Revenues expected to be up sequentially by approximately 20% vs. Q3-2001

• Nokia Networks revenues are expected to be up sequentially but to show a 20%

decline vs. Q4-2000

• Nokia Mobile Phones revenues are expected to be 25% up sequentially and close

to levels of Q4-2000

• Nokia Ventures Organization at Q3-2001 levels for revenue and profits

• Pro forma Q4-2001 EPS is expected to be between .18 to .20 Euro (diluted)

• Net operating cash flow is expected to remain positive

• ‘Common Group Expenses’ approx. EUR 40 million

• ‘Share of Associated Companies’ charge of EUR 10 million

• ‘Financial Income’ approx. EUR 10 million

• ‘Minority Interests’ to remain unchanged from Q3-2001

• Pro forma tax rate approx. 30%

2002 guidance:

• Sales growth for Nokia to reach 25-35% at some point during year

Nokia's market position in stronger than

ever

• we have emphasised efficiency and productivity in

our drive to protect profitability and cash flow

• we have been able to strengthen our market position

and maintain our profitability

• we have remained absolutely focused on our core

businesses – where we can best leverage our greatest
strengths and

• we continue to invest heavily in R&D and brand

Nokia's market position in stronger than

ever

• we have a very healthy balance sheet and strong

cash flow

• we will more aggressively pursue growth and

market share

• we will deliver innovative and cost efficient network

solutions

• we will raise the bar for the mobile phone industry

by introducing a host of new products and product

concepts