Nokia Reports 40% Drop In Profits

With its CEO on the hot seat and disappointing new reports of plunging profits, Nokia is turning to its tried and true Symbian operating system to bail itself out of its current travails.

Second-quarter profits, reported Thursday, dropped 40% to $291 million, putting more pressure on Nokia's embattled CEO, Olli-Pekka Kallasvuo. The firm ships more mobile handsets than any other company, but it lacks a strong smartphone portfolio, which tend to generate high profit margins.

Kallasvuo is looking to the new Symbian 3 operating system on the N8 handset as salvation not only for his job -- Nokia has been widely reported to be seeking a CEO replacement -- but to establish a position in the smartphone sweepstakes, currently dominated by iPhones and Android phones.

"Nokia will make a comeback at the higher end of the smartphone market," Kallasvuo told a group of investment analysts after the company announced its second-quarter financial results. "We are approaching the end of this painful product transition at the high end of our product portfolio. Delivering the N8, with a high-quality user experience, will mark the beginning of our renewal. We will achieve our potential and regain high-end leadership in our industry."

The Symbian operating system has been the workhorse OS for most of the world's mobile handsets for years and it is familiar and well-liked by developers, but Symbian 3 is still awaiting final consumer acceptance. Kallasvuo says he is confident it will succeed when the N8 hits the market late in the third quarter, in time for the traditional best-selling holiday sales period.

What happens with Meego, Nokia's new high-end operating system it is developing with Intel?

Kallasvuo said Meego will be targeted at the U.S. market. "The Meego team has very much been instructed – or ordered if you like – to give priority to the U.S. market," he added.

Kallasvuo didn't directly address the reports that the Nokia board is looking for a new CEO, but he did indicate in a television interview that he hoped the exit reports would cease.

Nokia also reported that sales at its Navteq navigation unit surged 71% to $325 million while its operating loss dropped. Nokia Siemens Networks -- dominated by Nokia -- reported a slight sales decline to about $3.92 billion. NSN signed a $7 billion contract with terrestrial-satellite firm LightSquared earlier in the week.