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While the world’s largest cell phone maker reported fewer sales over last year, the outlook for the remainder of 2009 is looking up.

 

In its second quarter earnings statement, Finland-based Nokia (News - Alert) reported that sales in devices and services are down about 28 percent year-over-year, although they’re up sequentially (first and second quarter of 2009 combined) by 7 percent.

 

Another industry leader – Sweden’s Sony Ericsson (News - Alert) – reported a loss of $213 million for the second quarter, which is an improvement compared to the $293 million they lost last quarter. Sony Ericsson shipped 14.5 million handsets in the second quarter, which is down from 24.4 million in the year-ago quarter.

 

Evidently, in the midst of a recession, the market is still taking a hit, but starting to show signs of stabilization. Nokia and Sony Ericsson officials predict the third quarter will be equally challenging, but attribute cost reduction and tightened operating expenses as short-term priorities while the economy remains uncertain.

 

Based on Nokia’s preliminary market estimate, the company’s mobile device market share for the second quarter 2009 was 38 percent, compared with 40 percent in the second quarter 2008 and 37 percent in the first quarter 2009.

 

In a statement today, Olli-Pekka Kallasvuo (News - Alert), CEO of Nokia, said: “Nokia put in a solid performance in what was another tough quarter. We increased our share of the global mobile device market sequentially to an estimated 38 percent and grew our smartphone market share to an estimated 41 percent. As a result of strong operational execution, underlying operating margins improved sequentially in all segments. Competition remains intense, but demand in the overall mobile device market appears to be bottoming out. As before, we are continuing to tightly manage our operating expenses.”

 

Kallasvuo added: “We are balancing short-term priorities with our longer-term growth ambitions as elements of the mobile handset, PC, Internet and media industries converge to form a new industry. Consumers will increasingly expect devices and services designed as integrated solutions. To capture this opportunity we are accelerating our strategic transformation into a solutions company.”

 

Nokia announced in March that they were laying off an additional 1,700 workers, following 1,000 employees who were asked to leave “voluntarily” just weeks prior.

 

In April, TMCnet reported that Sony Ericsson had already laid off 2,000 workers, and that another 2,000 would bring “restructuring charges” of about $260 million.

 

“As expected, the second quarter was challenging and we still believe the remainder of the year will be difficult for Sony Ericsson. Our focus remains on bringing the company back to profitability and growth as quickly as possible, and our performance is starting to improve due to our cost reduction activities. The new product portfolio that integrates communications, entertainment and social media applications should contribute to healthier topline development when shipments start later this year,” Dick Komiyama (News - Alert), president of Sony Ericsson, said in a statement. “We remain confident that the actions we are taking will further improve our financial situation and strengthen Sony Ericsson’s competitiveness.”

 

Kallasvuo and Komiyama could not be reached for immediate comment.

Sony Ericsson maintains its forecast that the global handset market for 2009 will continue to contract by at least 10 percent from around 1,190 million units in 2008. Sony Ericsson estimates that its market share was over 5 percent in the second quarter.

In a new study from New York City-based ABI Research (News - Alert), the so-called “underserved markets” in developing nations hold substantial potential for the market. The world’s largest underserved markets for mobile communications are in developing nations and regions, including Asia, Africa, Latin America, all of which have vast potential, but formidable barriers stand in the way.