Earnings Soar at Nokia on Third World Demand

Nokia, the largest maker of cellphones, said yesterday that its profit surged 85 percent in the third quarter as strong demand for low-cost phones in Africa, the Middle East and Asia lifted its share of the market to 39 percent.

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Window shoppers in front of a Nokia mobile phone display at a shopping mall in Manila.

Market share rose from 36 percent in the previous quarter as consumers in all regions except North and South America bought increasing numbers of entry-level phones costing less than 30 euros (). Increased demand outside the United States more than offset slight declines in the Americas.

Analysts said Nokia's ability to make inexpensive cellphones at factories in China and India profitably would help the company build on its already sizable lead over its challengers - Motorola, Samsung and Sony Ericsson - whose combined market share barely equals that of Nokia.

"It may not be in the fourth quarter, but it is probably only a matter of a few quarters before Nokia surpasses a 40 percent share," said Carolina Milanesi, a Gartner analyst in London. "They are really the only major manufacturer out there focusing on the low end of the market, and that's where the growth is now."

Nokia, of Espoo, Finland, said its third-quarter profit rose to 1.56 billion euros (.23 billion) from 845 million euros in the period a year earlier. Sales increased 28 percent, to 12.9 billion euros.

Unit sales of cellphones rose 45.1 percent, to 19.3 million devices, in Africa and the Middle East, while increasing 37 percent in China, to 18.9 million, and 41.1 percent in the rest of the Asia-Pacific region, to 29.5 million. Unit sales fell 1.7 percent in North America, to 5.4 million.

For most of the decade, as Nokia's market share hovered around 37 to 39 percent, Olli-Pekka Kallasvuo, the chief executive, and his predecessor, Jorma Ollila, now chairman, had set 40 percent as a long-term goal. But as Nokia's sales began to accelerate this year, Mr. Kallasvuo said Nokia was resetting its sights higher and 40 percent was no longer its goal.

Mr. Kallasvuo warned that the company must meet challenges from Research in Motion's BlackBerry and from Apple, which will begin selling the iPhone in Europe next month.