Nokia 2011 Annual Report Download - page 107

In general, the depreciation of an emerging market currency has a negative impact on our operating
profit due to reduced revenue in euro terms and/or the reduced purchasing power of customers in the
emerging market. The appreciation of an emerging market currency generally has a positive impact on
our operating profit.
Significant changes in exchange rates may also impact our competitive position and related price
pressures through their impact on our competitors.
For a discussion on the instruments used by Nokia in connection with our hedging activities, see Note
34 to our consolidated financial statements included in Item 18 of this annual report. See also Item 11.
“Quantitative and Qualitative Disclosures About Market Risk” and Item 3D. “Risk Factors.”
Seasonality
Our Devices & Services sales are somewhat affected by seasonality. Historically, the first quarter of
the year has been the lowest quarter and the fourth quarter has been the strongest quarter, mainly due
to the effect of holiday sales. However, over time we have seen a trend towards less pronounced
seasonality. The difference between the sequential holiday seasonal increase in the Western
hemisphere in fourth quarter and subsequent decrease in first quarter sequential volumes has
moderated. The moderation in seasonality has been caused by shifts in the regional make-up of the
overall market. Specifically, there has been a larger mix of industry volumes coming from markets
where the fourth quarter holiday seasonality is much less prevalent.
Our Location & Commerce sales to the automotive industry are not significantly affected by
seasonality. However, Location & Commerce sales to navigation device and mobile device
manufacturers typically see strong fourth quarter seasonality due to holiday sales. As the relative share
of licensing of Location & Commerce digital map data and related location-based content and services
for use in mobile devices compared to in-vehicle navigation systems has increased during the last few
years, Location & Commerce sales have been increasingly affected by the same seasonality as mobile
device sales.
Nokia Siemens Networks also experiences seasonality. Its sales are generally higher in the last quarter
of the year compared with the first quarter of the following year due to network operators’ planning,
budgeting and spending cycles.
Accounting Developments
The International Accounting Standards Board, or IASB, has and will continue to critically examine
current IFRS, with a view towards improving existing IFRS as well as increasing international
harmonization of accounting rules. This process of improvement and convergence of worldwide
accounting standards has resulted in amendments to existing rules effective during the year ended
December 31, 2011. These are discussed in more detail under “New accounting pronouncements
under IFRS” in Note 1 to our consolidated financial statements included in Item 18 of this annual
report. The adopted 2011 amendments to IFRS did not have a material impact on our results of
operations or financial position.
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