Nokia 2004 Annual Report Download - page 17

successful product introductions and shipments. The quarterly and annual sales and operating
results in our mobile device businesses also depend on a number of other factors that are not
within our control. Such factors include the global growth in mobile device volumes, which is
influenced by, among other factors, regional economic factors, competitive pressures, regulatory
environment, the timing and success of product and service introductions by various market
participants, including network operators, the commercial acceptance of new mobile devices,
technologies and services, and operators’ and distributors’ financial situations. Our sales and
operating results are also impacted by fluctuations in exchange rates and at the quarterly level by
seasonality. In developing markets, the availability and cost, through affordable tariffs, of mobile
phone service compared with the availability and cost of fixed line networks may also impact
volume growth.
In our mobile networks business, we also seek to maintain healthy levels of sales and profitability
and try to grow faster than the market. Our networks business’s quarterly and annual net sales
and operating results can be affected by a number of factors, some of which we can influence,
such as our operational efficiency, the level of our research and development investments and the
deployment progress and technical success we achieve under network contracts. Other relevant
factors include operator investment behavior, which can vary significantly from quarter to
quarter, competitive pressures and general economic conditions although these are not within our
control.
The new business areas that we have entered may be less profitable than we currently foresee, or
they may generate more variable operating results than we currently foresee. We expect to incur
short-term operating losses in certain of these new business areas given our early stage
investments in research and development and marketing in particular. Also our efforts in
managing prices and costs in the long-term, especially balancing prices and volumes with research
and development costs, may prove to be inadequate.
Although we may announce forecasts of our results of operations, uncertainties affecting any of
these factors, particularly during difficult economic conditions, render our forecasts difficult to
make, and may cause us not to reach the targets that we have forecasted, or to revise our
estimates.
Our sales and results of operations could be adversely affected if we fail to efficiently manage
our manufacturing and logistics without interruption, or fail to ensure that our products and
solutions meet our and our customers’ quality, safety and other requirements and are
delivered in time.
Our manufacturing and logistics are complex, require advanced and costly equipment and include
outsourcing to third parties. These operations are continuously modified in an effort to improve
manufacturing efficiency and flexibility. We may experience difficulties in adapting our supply to
the demand for our products, ramping up or down production at our facilities, adopting new
manufacturing processes, finding the most timely way to develop the best technical solutions for
new products, or achieving manufacturing efficiency and flexibility, whether we manufacture our
products and solutions ourselves or outsource to third parties. Such difficulties may have a
material adverse effect on our sales and results of operations and may result from, among other
things: delays in adjusting or upgrading production at our facilities, delays in expanding
production capacity, failure in our manufacturing and logistics processes, failures in the activities
we have outsourced, and interruptions in the data communication systems that run our
operations. Also, a failure or an interruption could occur at any stage of our product creation,
manufacturing and delivery processes, resulting in our products and solutions not meeting our
and our customers’ quality, safety and other requirements, or being delivered late, which could
have a material adverse effect on our sales, our results of operations and reputation and the value
of the Nokia brand.
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