Nokia 2009 Annual Report Download - page 98

NAVTEQ selling and marketing expenses in 2009 were EUR 217 million compared with EUR 109 million
for the period from July 10, 2008 to December 31, 2008. NAVTEQ selling and marketing expenses
primarily consisted of amortization of intangible assets recorded as part of Nokia’s acquisition of
NAVTEQ totaling EUR 115 million and EUR 57 million in 2009 and 2008, respectively. Selling and
marketing expenses were also driven by investments to grow NAVTEQ’s worldwide sales force and
expand the breadth of its product offerings. Selling and marketing expenses represented 32.4% of
NAVTEQ net sales in 2009 compared to 30.2% of NAVTEQ net sales in 2008.
NAVTEQ operating loss in 2009 was EUR 344 million, with an operating margin of negative 51.3%
compared with operating loss of EUR 153 million and with an operating margin of negative 42.4% for
the period from July 10, 2008 to December 31, 2008. The operating loss in both periods was primarily
the result of the amortization of intangible assets recorded as part of Nokia’s acquisition of NAVTEQ,
which was partially offset by profits from NAVTEQ’s ongoing business.
Nokia Siemens Networks
According to our estimates, the mobile infrastructure market declined by about 5% in euro terms in
2009 compared to 2008 with the trend varying, depending on region. The primary cause of the
decline was the deterioration in global economic conditions, which caused many operators to delay
investments in network infrastructure. In many markets, this was characterized by caution on the part
of operators concerned about enduser behavior and subsequent declining revenues, but in certain
markets, including parts of Asia Pacific, Middle East and Africa and Eastern Europe, restricted access to
financing resulted in capital expenditures being cancelled. The emerging professional services
segment also continued to grow as operators sought efficiencies for their network through
outsourcing network management to infrastructure vendors. The mobile infrastructure market was
characterized by a decline in investment in 2G networks which was not offset by continued
investment in 3G. One exception was China, where investment in 3G rollouts resulted in growth in
that market. Globally, the network infrastructure equipment segment continued to be affected by
significant price erosion of the equipment, largely as a result of maturing technologies and intense
price competition. The fixed infrastructure market continued to be characterized by intense price
competition in 2009, both in terms of the equipment price erosion due to heavy competition,
especially from Asian vendors, and declining tariffs.
The following table sets forth selective line items and the percentage of net sales that they represent
for Nokia Siemens Networks for the fiscal years 2009 and 2008.
Year Ended
December 31,
2009
Percentage of
Net Sales
Year Ended
December 31,
2008
Percentage of
Net Sales
Percentage
Increase/
(Decrease)
(EUR millions, except percentage data)
Net sales ................. 12574 100.0% 15309 100.0% (18)%
Cost of Sales .............. (9162) (72.9)% (10 993) (71.8)% (17)%
Gross profit ............... 3412 27.1% 4 316 28.2% (21)%
Research and development
expenses ............... (2271) (18.1)% (2 500) (16.3)% (9)%
Selling and marketing
expenses ............... (1349) (10.7)% (1 421) (9.3)% (5)%
Administrative and general
expenses ............... (573) (4.6)% (689) (4.5)% (17)%
Other income and expenses . . (858) (6.8)% (7) (0.0)%
Operating profit............ (1639) (13.0)% (301) (2.0)% (445)%
Nokia Siemens Networks’ net sales in 2009 decreased 18% to EUR 12 574 million compared with
EUR 15 309 million in 2008. The decrease in net sales reflected extremely challenging market
conditions with significant investment restraint by our customers in line with the general economic
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