Nokia (s NOK) reported financial results for the first quarter today and, despite posting a 90 percent drop in profits, gave investors something to celebrate. The world’s largest cell phone maker said the handset market hit bottom in the first quarter and sales for the rest of the year would be off by about 10 percent from the year prior. Nokia sold 93 million devices from January through March, down 19 percent from 115 million in the year-ago quarter. It also maintained the 37 percent cell phone market share it reported in fourth quarter, down 2 percent from the same period a year ago. Nokia reported profit of €122 million ($161 million) on sales of €9.3 billion ($12.2 billion) for the quarter.
Like Intel’s (s INTC) report on Tuesday, when the chipmaker told the world that the decline in PC sales had bottomed, this news is encouraging — but it’s no reason to get out the party hats. One can coast along at the bottom for a while before seeing things trend up. What these companies are telling us is that many of their buyers have run through the inventory they had on hand when the economy went off the rails last fall, and they’ll now need to start buying replacements.
But the news wasn’t all good. Nokia said the market for network equipment would be down by 10 percent, not 5 percent, as it had projected during its fourth quarter results in January. That’s bad news for the telecommunications equipment makers, who have so far been hard hit by the credit crunch. AT&T (s T) has said it would rein in capital spending in 2009 as have other operators.