Sci Sim

OLLI-PEKKA KALLASVUO, Nokia CEO:

“Nokia continued to grow in the second quarter thanks to an excellent performance from our device businesses. Nokia’s share of the global device market improved to an estimated 38%, while operating margins in our device businesses were at their highest level in three years. Diluted EPS was up 39% year on year, excluding special items.

Nokia now has some major hit products across what is already the industry’s broadest product portfolio. I am particularly encouraged by the success of a number of recently launched higher end devices, which made a strong contribution to increased profitability.

Nokia Siemens Networks had a challenging quarter. Both net sales and margins were weak and these adverse developments require decisive action. Accordingly, Nokia and Nokia Siemens Networks are accelerating and increasing the new company’s annual cost synergies target. Nokia Siemens Networks must also ensure that the company is positioned for success and leadership in the fast changing infrastructure market.”

Second quarter 2007 highlights

• Nokia diluted EPS of EUR 0.32, excluding special items, growing 39% from Q2 2006
• Nokia operating cash flow of EUR 1.5 billion
• Nokia device volumes of 100.8 million units, up 11% sequentially and up 29% year on year
• Nokia estimated device market share of 38%, up from 36% in Q1 2007 and up from 34% in Q2 2006
• Nokia device ASP of EUR 90, up from EUR 89 in Q1 2007
• Mobile Phones, Multimedia and Enterprise Solutions gross and operating margins up significantly sequentially and year on year
• Enterprise Solutions reached profitability with 18.0% operating margin
• Excellent performance from new devices: Nokia 6300, Nokia N95 and Nokia E65
• Nokia Siemens Networks operating margin was -10.5%, excluding special items
• Nokia and Nokia Siemens Networks have accelerated their cost synergy target for Nokia
• Siemens Networks and now aim to achieve the approximate EUR 1.5 billion of annual cost synergies by the end of 2008 rather than by 2010
• Nokia and Nokia Siemens Networks are also targeting a further EUR 500 million of annual cost synergies

Q2 2007 Financial Highlights

(Comparisons are given to the second quarter 2006 results, unless otherwise indicated.)

As of April 1, 2007, Nokia results include those of Nokia Siemens Networks on a fully consolidated basis. Nokia Siemens Networks, a company jointly owned by Nokia and Siemens, is comprised of the former Nokia Networks and Siemens’ carrier-related operations for fixed and mobile networks. Accordingly, the results of Nokia Group and Nokia Siemens Networks for periods from April 1, 2007 are not directly comparable to any prior period results. Prior periods include the former Nokia Networks business group only.

Nokia’s second quarter 2007 net sales increased 28% to EUR 12.6 billion, compared with EUR 9.8 billion in the second quarter 2006. At constant currency, group net sales would have increased 32%.

Industry and Nokia outlook

• Nokia expects industry mobile device volumes in the third quarter 2007 to be slightly up sequentially
• We expect Nokia’s device market share in the third quarter 2007 to increase sequentially
• Nokia now expects industry mobile device volumes in 2007 to grow by 10% or more from the approximately 978 million units Nokia estimate for 2006. The previous estimate for the industry mobile device volume growth in 2007 was up to 10%
• Nokia continues to expect the device industry to experience value growth in 2007, but expects some decline in industry ASPs, primarily reflecting the increasing impact of the emerging markets and competitive factors in general
• Nokia continues to target an increase in its market share in mobile devices in 2007
• Nokia continues to expect very slight market growth for the mobile and fixed infrastructure and related services market in euro terms in 2007
• Nokia and Nokia Siemens Networks no longer target a double digit operating margin (excluding special items) for Nokia Siemens Networks by the end of the new company’s first year of operations
• Nokia and Nokia Siemens Networks now expect the new company’s operating margin (excluding special items) to improve in the second half of 2007
• Nokia Siemens Networks restructuring charges and other special items are expected to be significantly less during Q3 2007 and Q4 2007 than in Q2 2007
• Nokia and Nokia Siemens Networks have accelerated their cost synergy target for Nokia Siemens Networks and now aim to achieve the approximate EUR 1.5 billion of annual cost synergies by the end of 2008 rather than by 2010
• Nokia and Nokia Siemens Networks are also targeting a further EUR 500 million of annual cost synergies.