Nokia 2008 Annual Report Download - page 12

3D. Risk Factors
Set forth below is a description of risk factors that could affect Nokia. There may be, however,
additional risks unknown to Nokia and other risks currently believed to be immaterial that could turn
out to be material. These risks, either individually or together, could adversely affect our business,
sales, results of operations, financial condition and share price from time to time.
We are a global company and have sales in most countries of the world and, consequently,
our sales and profitability are dependent on general economic conditions globally and locally.
The impact of the current global economic turmoil and any further deterioration of global
economic conditions, as well as the related financial crisis, on us, our customers and end
users of our products, services and solutions, our suppliers and collaborative partners may
have a material adverse effect on our business, results of operations and financial condition.
As we are a global company and have sales in most countries of the world, our sales and profitability
are dependent on general economic conditions both globally and locally. The mobile communications
industry has matured to varying degrees in different markets and, consequently, the industry is more
vulnerable than before to the negative impacts of the current difficult global economic conditions.
The recent weakening of consumer and corporate confidence, declining income and asset values in
many areas and other adverse factors related to the current deteriorating global economic conditions,
aggravated by the unprecedented currency volatility, have resulted and may continue to result in our
current and potential customers as well as the endusers of our products, services and solutions
postponing or reducing spending on our products, services and solutions. For example, many
consumers may not upgrade their devices or they may postpone the replacement of their devices or
the purchase of their first device due to more limited financial resources or the expectations of lower
prices in future; mobile network operators may further reduce the device subsidies that they offer to
the endusers or attempt to extend the periods of contracts that obligate the consumer to use a
certain device; consumers may be less willing to pay for our consumer Internet services and mobile
network operators may invest less in ramping up those services; the demand for map information
and other locationbased content by automotive and mobile device manufacturers may decline
following the contraction of the sales in the automotive and consumer electronics industry; and
network operators and service providers may postpone their investments in their network
infrastructure and related services.
The global financial crisis has also led to more limited availability of credit which may have a
negative impact on the financial condition, and in particular on the purchasing ability, of some of our
distributors, independent retailers and network operator customers and may also result in requests
for extended payment terms, credit losses, insolvencies, limited ability to respond to demand or
diminished sales channels available to us. The general difficult economic conditions combined with
tightening credit markets may also cause financial difficulties for our suppliers and collaborative
partners which may result in their failure to perform as planned and, consequently, in delays in the
delivery of our products, services and solutions.
The related currency fluctuations, such as the recent severe volatility in exchanges rates, may also
increase the costs of our products, services and solutions that we may not be able to pass on to our
customers or impair the purchasing power of our customers in different markets; result in significant
competitive benefit to certain of our competitors who incur a material part of their costs in other
currencies than we do; hamper our pricing; and increase our hedging costs and limit our ability to
hedge our exchange rate exposure.
The difficult global economic conditions may also result in inefficiencies due to our deteriorated
ability to appropriately forecast developments in our industry and plan our operations accordingly,
delayed or insufficient investments in our new market segments and failures to adjust our costs
appropriately. Also, continuing difficult general economic conditions, negative developments in our
industry, any significant underperformance relative to historical or projected future results by us or
any part of our business, or any significant changes in the manner of our use of the acquired assets
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