Bill Seymour - Director of IR Olli-Pekka Kallasvuo - President and CEO Rick Simonson - CFO

Tim Long - Banc of America Tim Boddy - Goldman Sachs Paul Sagawa - Bernstein Has Malik - Citigroup Mike Walkley - Piper Jaffray Stuart Jeffrey - Lehman Brothers Richard Kramer - Arete Gareth Jenkins - Deutsche Bank Sandeep Malhotra - Merrill Lynch Mark Sue - RBC Capital Markets Christine Armacost - Lazard Capital Markets

At this time, I would like to welcome everyone to the Nokia Fourth Quarter and Full Year 2006 Earnings Call. I will now turn the call over to Mr. Bill Seymour, Head of Investor Relations. Sir, you may begin.

Ladies and gentlemen, welcome to Nokia's fourth quarter 2006 conference call. I am Bill Seymour, Head of Nokia Investor Relations. Olli-Pekka Kallasvuo, President and CEO of Nokia; and Rick Simonson, CFO of Nokia are with me today. During this call -- briefing and call, we will be making forward-looking statements regarding the future business and financial performance of Nokia in the mobile communications industry. These statements are predictions that involve risks and uncertainties, actual results may therefore differ materially from the results currently expected. Factors that could cause such differences can be both external, such as general economic and industry conditions as well as internal operating factors. We have identified these in more detail on pages 12 to 22 in our 2005 Form 20-F in our press release issued today. Our aim is to finish this call in approximately one hour. To view the supporting slides while listening to the call, please log on to nokia.com/investor. A replay of the call will be available beginning two hours after this call until 12:00 am U.S. Eastern time next Tuesday. The call will also be archived on our website. Olli-Pekka, please go ahead.

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IR firm sponsors transcript of micro-cap company: Consulting company sponsors company's transcript in sector of interest: Your company's name and promotion could have been on this transcript! Learn more, or email Zack Miller for details. Olli-Pekka Kallasvuo: Thank you. Ladies and gentlemen, I am very pleased with the performance of the Nokia team in Q4 and in 2006. Nokia achieved record device volumes, net sales, and EPS for both the fourth quarter and 2006. The key theme for Nokia for Q4 and 2006 -- and '06 was growth. Net sales grew 13% in Q4 and 20% in 2006. Operating profit excluding special items grew 12% in Q4 and 18% in '06. Diluted EPS excluding special items grew 20% in Q4 and 29% in '06. Device volumes grew 26% in Q4 and 31% in 2006, and our world leading device market share of 36% grew two points in Q4 and three points in 2006. In fact, we have been able to increase our market share and we have maintained a very healthy gap from Motorola. And based on our strengths of world-class brand products, cost structure, and logistics, we were able to increase our device market share significantly in 2006 without sacrificing operating margins or cash flow. Nokia Networks net sales grew 12% in Q4 and 14% in '06. Also specifically important for the fourth quarter, gross margins were up in all Nokia business groups sequentially. Let's take a closer look at the overall device market and our device business. We estimate the fourth quarter mobile device market was 290 million units, growing 19% both year-on-year and sequentially. The slide shows our estimates of the regional and technology market statistics for the fourth quarter. One thing I would like to highlight is that emerging markets were again the driver of growth, with markets like China, Southeast Asia-Pacific, India and Middle East and Africa each seeing year-on-year growth of over 35% in the fourth quarter. The device market in the fourth quarter was slightly stronger than we expected and it looks solid as we start the year. Our estimated device market share was 36% in the fourth quarter, flat sequentially and up 2 points year-on-year. In terms of specific markets for the fourth quarter based on our initial estimates, sequentially Nokia gained market share in Europe, where we saw gains in Russia, Germany, Italy and Spain. Year-on-year Nokia gained market share in every region, except North America. Our position in the fastest growing markets of the world continues to be extremely strong. We estimate that we are the clear number one in India, China, Middle East & Africa, South East Asia Pacific, and wideband CDMA. As we said at the Capital Market Days, this number one position is important, as these are the markets that are both growing faster than the rest of the market and where we have high share. For example, in 2006, the emerging markets grew at almost three times the rate of the developed market and the wideband CDMA GSM market grew over two times faster than the CDMA market. We expect this kind of trend will continue in '07. On to the product highlights for the fourth quarter. The Nokia 1600 continued to hold the top volume spot for us in the quarter, with volumes up almost 40% sequentially. Volumes of the new entry level Nokia 2310 and Nokia 2610 almost doubled sequentially. Demand for the Nokia 5200 and the 5300 music devices was very good in the quarter, in combined sales of over 2 million units. Feedback and product reviews on these music devices have been very positive. The refreshed Nokia fashion collection also saw good sequential growth during the quarter. Sales of the Nokia 6131 family of clamshell devices including the Nokia 6133 for the US market were up significantly sequentially. Nokia's N-series Multimedia Computers have volumes of almost 6 million units in the quarter. The Nokia N73 Multimedia Computer was again the number one profit contributor for Nokia in the quarter. We also saw especially strong demand for the new music additions of the Nokia N70 and N73 during the quarter. The Nokia E Series had over 60% sequential volume growth in the quarter with the Nokia E50, the best selling device. However, despite the initial positive reviews, sales of the Nokia E61 and E62 were lower than expected, contributing to Enterprise Solutions disappointing results for the quarter. The following products are expected to be significant in the first quarter. In the entry level, the high volume devices are expected to be the Nokia 1600, 1110, 2610, and 2310. We also expect to start shipments of the Nokia 2626 entry level phone in the first quarter. In the mid range, we expect the Nokia 6131, 6233, 6230i, and 6111 to sell in high volumes. We expect the Nokia 5200 and 5300 music phones to continue their positive momentum. We also expect to start shipments of the new Nokia 6086 UMA clamshell phone and the Nokia 6290 UMTS clamshell phone. And last, we stopped the shipments of the Nokia 6300, the slim midrange phone we announced at Capital Market Days. The instant feedback on this phone has been very positive. In converged devices, the significant products are expected to be Nokia N73, Nokia N70, and Nokia N72 Multimedia computers. We also expect to start shipments of the new Nokia N95 and Nokia N76. The Nokia N76 delivers an exceptional music experience with all the functionality of a 3G-enabled multimedia computer in a thin and elegant design. And the Nokia N95 is that which have convergence device that includes pieces that 5-megapixel camera, GPS-based navigation, and HSDPA, all in a compact dual slide form factor. I believe the Nokia N 95 is simply a fantastic product. For Enterprise, we expect the current Nokia E-series to continue to be the main volume products in the first quarter. You should expect a product, a press of the E series later in the first half, and then onto the networks. Networks had good net sales growth both in the fourth quarter and 2006, executing well on its strategy to grow its market share, as the industry rapidly consolidates. During the fourth quarter, Networks announced many global deals including five significant managed services contracts and seven large network expansion deals. During the quarter, Nokia won a large deal with T-Mobile USA to deploy wideband CDMA across the US, using our innovative Flexi wideband CDMA base stations. We also won a strategically very important deal with Sprint Nextel US as a key infrastructure provider for its 4G WiMAX next generation mobility network. This will be the first time we have been the supplier for Sprint Nextel and I really think this deal is strategically very important. The Nokia Siemens Networks integration work is progressing and joint compliance review is underway. We expect to begin operations as previously communicated. And, now I'll pass it over to Rick.

Thanks Olli-Pekka. As we heard earlier in the fourth quarter, Nokia net sales were up a strong 13% year-on-year. Excluding special items, Nokia fourth quarter operating profit was up 12% year-on-year and diluted EPS was up 20%. In the fourth quarter, Nokia's gross margin was up over 150 basis points sequentially and gross margins were up sequentially in all Nokia business groups. Nokia fourth quarter device ASP was EUR 89, down 4% sequentially. And I realize that many times in the past, device ASPs and gross margins have moved in tandem and you may have some question as to why that didn’t happen in this quarter. Let me tackle these separately and try to add a little color here. The sequential gross margin increase in the device business was caused primarily by improved margins in our entry level business. Gross margins in our entry level device business were up significantly sequentially, and it has been driven by a healthy portfolio, good product mix and the benefits of cost efficiency programs we've had in the works for sometime and talked a lot about over 2006. While competitors have been talking a lot about getting into the entry level market and talking about what great opportunities there are in the entry level. We've been building our capabilities in these markets for over a decade. And, we are not standing still now. Over the course of last year, the benefits of multiple efforts showed up in our improving gross margin and improving operating margins for entry level business. These efforts included significant product refresh during the year, consolidating our production to lower cost facilities and general product cost efficiencies. The product cost efficiencies were achieved through many things like lower cost chipsets and with higher levels of billing material integrations. There have been some recent discussions as to how Nokia would in some way be it at a cost disadvantage in the entry level, especially with the introduction of Moto phone. But let me assure you that we do not believe this to be the case now, or in the future. We estimate that our highest selling entry level phones that use our existing low-cost card engine like the Nokia 1110 and 1600 have component counts approximately 20% lower than Moto phone. And these phones have been in the market for over one year. We have products in production now based on our proprietary signal chip architecture that are expected to have even a lower cost and lower component count with higher levels of integration. Improvement across all these metrics compared to our own existing products and we believe better than the competition. Going forward, we feel very good about the sustainability of our competitive position in our entry level business. However, you will see and should expect to see some normal volatility from quarter-to-quarter in this business unit as is normally the case. Also helping mobile phones business group in overall device margins in the quarter was a positive contribution from the Nokia 5200 and 5300 products. We expect these products to continue their good momentum and we expect that other products such as the Nokia 6300 should also have positive impact going forward. Gross margin were up sequentially in multimedia, as they benefited from a variety of things including a higher proportion of higher margin Nokia N73 in the fourth quarter. While the N73 was well received in the fourth quarter, our ramp up of this product was below our plans and expectations. As it took longer than we had anticipated to produce the different local and operator variants that are required by the market. With products like these, it's important to ensure that we have the quality and usability right before we hit the mass market with the volumes we expect from this kind of product. In networks, the slight sequential gross margin increase was driven a favorable product mix. As we said, you should expect and will see some volatility for quarter-to-quarter in our gross -- excuse me in our device gross margins. I won't repeat the ongoing factors that we think can drive gross margin, but instead we put them on the slide at the back of the presentation for your continuing reference. Reported operating margins were up sequentially in Q4 from 10.9% to 13%. Excluding special items, operating margin were up a 110 basis points, driven by the gross margin increases in all the business groups. Even with OpEx up as a percentage of sales, mobile phones operating profit was up 260 basis points sequentially, excluding the charge from the third quarter, driven mostly by the gross margin increase. Multimedia's operating margins were down 230 basis points sequentially as the gross margin increase was not enough to offset the increase in OpEx. Enterprise solutions operating loss was flat sequentially in the quarter, higher volumes of the Nokia E-Series was expected to reduce the loss in the fourth quarter. However, as Olli-Pekka mentioned, the sales of the Nokia E61 and E62 fell somewhat short of our expectations. Excluding special items, Networks operating margins were up sequentially in the fourth quarter, driven primarily by higher gross margins, as reflected by the better mix. Nokia's fourth quarter device ASP was EUR 89, down 4% sequentially. The primary driver of the low ASP was mix. The sequential ASP decline was driven by a combination of greater mix sales of low-end devices and a lower mix of higher-end devices. For example, the mobile phones business group, which has lower ASPs than the overall device average grew significantly faster sequentially than the multimedia business group, which has ASPs much higher than the overall device average. If you look at the mobile phones business group specifically, ASPs were actually down only slightly sequentially. And in our entry level business, entry level ASPs were actually slightly up sequentially proved I would say of no price war on our part. Like I said for gross margin, I won't go into the details of what we think are the continuing drivers of device ASP. We put these in the slide at the back of the presentation again for your continuing reference. Now, on specific financial items for full year 2007. We estimate our tax rate will be approximately 26%. We estimate CapEx will be approximately EUR 700 million and we estimate depreciation and amortization will total approximately EUR 725 million. Neither the CapEx nor the depreciation and amortization estimate include the impact of the Nokia-Siemens Networks merger. We will be updating you on these items after the merger closes. The impact of the fourth quarter special items to diluted EPS was a positive EUR 0.02. So, excluding the special items, fourth quarter diluted EPS was EUR 0.30, versus the reported EPS of EUR 0.32. In terms of the specific items, we took a EUR 39 million charge in Networks for the Nokia-Siemens Networks related to incremental cost expense during fourth quarter. This impacted Networks' operating profit. We also had a one time EUR 84 million benefit from tax refund in the quarter and this impacted the tax line. Excluding the special items, fourth quarter operating margin was 13.3% versus a reported 13.0%. The lower fourth quarter tax rate includes tax refunds of EUR 84 million, as I just mentioned, in the lower fourth quarter rate also includes adjustments made to prior tax estimates. On currencies, the fourth quarter reported year-on-year net sales growth was 13%, and in constant currency, it was 12%. Now, let's look at some of the balance sheet and cash flow items. Inventory was down over 30% sequentially in the fourth quarter. Accounts receivable were up slightly sequentially. CapEx was EUR 188 million and our cash and other liquid assets stood at EUR 8.5 billion at the end of the fourth quarter. The total operating cash flow in the fourth quarter was a very strong EUR 1.7 billion and in 2006, it totaled EUR 4.5 billion. I am very happy with how we have been able to improve our cash flow throughout the year. We have worked hard to reduce our working capital and it has paid off, as evidenced by the excellent fourth quarter cash flow results. We continue to deliver on our promise to reduce our cash through a combination of strong dividend payout and significant share buybacks. Since 2003, we have reduced our cash level from EUR 12.5 billion to EUR 8.5 billion, while the share count has fallen 15%. During 2006, we distributed EUR 4.9 billion to our shareholders through dividends and buybacks. The current buyback authorization will carry us through the end of the first quarter this year. And today, the Board of Directors proposed to the AGM a renewal of the buyback program for another year. For your modeling purposes, you should model approximately 5% for the new program which would start after the AGM in May. I'd like to summarize a few of the other relevant Board proposals and announcements that came out earlier today. The Board of Directors proposed an annual dividend of EUR 0.43 per share, up 16% from last year's dividends. As I said earlier, the Board also proposed the renewal of buyback authorization of up to 380 million shares. Both proposals are subject to shareholder approval in conjunction with our AGM on May 3rd. The Board also announced the plans to buy back shares using up to EUR 4 billion. But as I just mentioned, for modeling purposes, you should model approximately a 5% buyback. The Board also intends the cancellation of shares held by the company prior to the time of the AGM. Coming to Nokia's industry outlook for the first quarter in the full year of 2007, Nokia expects industry mobile device volumes in the first quarter 2007 to reflect normal industry seasonality following the strong fourth quarter 2006 selling period. We expect Nokia's device market share in the first quarter of 2007 to be at approximately the same level sequentially. We expect net sales in Nokia's Networks business group to experience a sequential seasonal decline in the first quarter 2007. Nokia expects industry mobile device volumes in 2007 to grow by up to 10% from the approximate 978 million units that we estimated for the total of 2006. Nokia continues to expect the device industries to experience value growth in 2007, but expects some decline in industry ASPs, primarily reflecting the increasing impact of the emerging markets and competitive factors in general. We continue to expect slight growth in the mobile and fixed infrastructure and related services market in Euro terms in 2007. Nokia continues to target an increase in its market share in mobile devices throughout 2007. Now, I'll hand it back to Olli-Pekka. Olli-Pekka Kallasvuo: Okay, thanks Rick. In 2006 and especially in the fourth quarter, we have great performance from our entry level business. In the device business, execution is keen and our excellent execution allowed us to capture a lot of incremental volume in the entry level and was a major contributor to our three points of share gain in 2006. Importantly, we were able to do this while keeping Nokia's overall device operating margin flat compared to 2005. This was done even at the percentage of units we sold under EUR 50, went from 23% of our volume in 2005 to 42% in 2006. One thing that contributed to the flat overall device operating margin was that entry level gross margins were increasing during the year and were up significantly in the fourth quarter. You may be tired of hearing us to say it, but the virtues of our world class brand, quality, cost structure, logistics and distribution do continue to make a huge positive difference compared to the competition. Nokia sales of converged devices [deteriorate] close to 40 million units in 2006 out of which Nokia N-series Multimedia Computers accounted for over 16 million and Nokia E-series enterprise devices almost 2 million units. I believe Nokia’s long-term growth will be driven by Internet convergence that enables us to expand our business into music navigations, navigation videos, internet browsing, games, and enterprise applications. By offering people devices, applications, and services in a single package we make it easy-to-create and consume content and say experiences. Web 2.0 and social networking is a key trend in the Internet today and Nokia N-series Multimedia Computers are the most convenient way for people to take part in Web 2.0 communities. Today, Nokia is the world’s largest manufacturer of camera and digital music players, with 140 million cameras and 70 million music devices sold in 2006. Converged devices are popular because people can have all their favorite applications in a single connected device that does not compromise on usability and is always with you. 2006 was a good year for Nokia. We achieved record device volumes, net sales, and EPS. But as good as 2006 was -- is good and in fact should have been better. So as we start 2007, we are looking for ways in which we can continue to improve our business The Nokia organization has done a lot of work on our product portfolio for 2007. We just in fact had our Annual Sales Conference in Miami last week and the [energy] level in the meeting was just excellent. Our sales people from around the globe were really excited about this year's portfolio, really excited. And I really shared up the excitement and look forward to another exciting year in this industry. Thank you very much.

Thanks, Olli-Pekka. We'll now continue with the Q&A session. As a friendly reminder, please limit yourself to one question only. Operator, please go ahead.

(Operator Instructions). Your first question comes from the line of Tim Long from Banc of America Tim Long - Banc of America: Thank you. Just a question on the European handset market if I could. Just looking at your regional splits, it looks like really two quarters in a row where the European theater at least sequentially has outgrown the overall company. Just curious as to the impact on ASP and some back of the envelope, it looks like the ASPs have maybe fallen a little faster in the European theatre. Could you just talk about that? Are we seeing a different mix for the industry in Europe? Do you think there is some share loss happening at the high end? Is it that 3G has kind of fallen off? Could you just talk about the moving parts within that theater? Thank you. Olli-Pekka Kallasvuo: Okay. Thank you, thank you, this is Olli-Pekka. What you have -- the observation in fact is correct and in that sense, it's a very good question. And what we have seen in Europe is something to a more limited extent than what we saw in the third quarter. So, we basically saw at that point of time, I said it in the conference call three months ago, we saw some softness in the wideband CDMA market. We have not seen that to such an extent, but definitely there was some commonality here between the fourth quarter and the third quarter. And in that way, there has been a slight mix shift in the European market or theatre as you say, and it’s basically a more balanced between different types of products. And entry level is relevant also in Europe that’s very clear. At the same time, ASPs in Europe continued to be higher than elsewhere in the marketplace. Tim Long - Banc of America: Okay. Just a follow-up, is it safe to assume WCDMA market share was pretty constant for Nokia in the quarter, sequentially?

In the market share there, we saw basically kind of similar performance with maybe just a little bit of slippage sequentially Q on Q, but nothing to write home about to? Tim Long - Banc of America: Okay, thank you.

Next question, please?

Your next question comes from Tim Boddy with Goldman Sachs. Tim Boddy - Goldman Sachs: Yes, thanks very much, and congratulations on breaking the trend between falling prices, and falling margins. I guess my question is about that, it will be very helpful to understand first of all, you indicated that your capital market say that gross margin in the entry level are at level or close to the level of the mobile phones group, is that still the case? And if so, am I right in understanding that as the industry mix continues to move to the low end, you won't see further gross margin pressure from that trend. Secondly, just about speed of the recovery in multimedia, you mentioned on your press conference, you had seen the shipments picking up again after these operator specific products have been delayed and of course, you've got your new products coming. So, could you give us any more color about the timing of the recovery is that soon, or will it in the next few quarters? Thank you. Olli-Pekka Kallasvuo: Yeah, Olli-Pekka here. The -- thank you first of all. And then, if you look at the gross margins in the mobile phone business group, so yes it is indeed true that the net gross margin levels in different parts of that business are pretty similar. Meaning in terms that you can not divide this between the entry market and the other markets. It really depends on the product and the competitive position of a given product, as opposed to a market where that is sold. And in that way, as historically as well as in this business, you should look at the, is this product new because typically you get the better margin on a new product. And in that way, the fundamentals of the business there have not changed and we just need to be competitive on the product level and in that way, we can have pretty similar type of margins in different regions of the world. Now, when it comes to the multimedia question, then I indeed in the press conference referred to a fact that we had some delays in ramping up certain operator variance in the multimedia divisions in the fourth quarter and also delays did easy up towards the end of the quarter. Having said that, it's very clear that you need to be able to be competitive in a given quarter. And I will not draw a direct conclusion from that fact that I refer to as far as the first quarter is concern. We will have a very -- in multimedia, we will have a very important product entry in the first quarter, the N95, and that will be important as far as the overall profit dynamics are concerned.

Next question, please?

Your next question comes from Paul Sagawa with Bernstein. Paul Sagawa - Bernstein: Hi. I was wondering, if you could a little bit about WCDMA's pickup and adoption of the technology and the trends in the marketplace. If we look at some of the reports from other companies participating in the industry, on one hand you had Texas Instruments, which really downplayed WCDMA, saying that shipments were a little weak for them and they were fairly pessimistic about it. Motorola actually talked about 3G -- sort of lower price 3G products, essentially eliminating the market for their higher price 2G product line and suggested that the other key to growth for them would be to tap into the strong WCDMA market. QUALCOMM yesterday kind of was in the middle of it, but has fairly good projections for WCDMA in 2007. Now, you said last quarter that WCDMA was a bit disappointing for you, this quarter maybe it picked up a little bit, how do you see WCDMA in 2007? What the dynamics that we see, price points at the low end of WCDMA dropping down and really crowding out mid range, EDGE and GSM devices. Is that this year that this happens? What percentage of the total market going forward do you think is going to be WCDMA?

Okay Paul, this is Rick. There is a lot in that. Paul Sagawa - Bernstein: Yeah.

And WCDMA, as Olli-Pekka said, we had a little bit of the same dynamic in fourth quarter as the third, but not as much, and what that all added up to in 2006, we had been talking about, the market had been talking about a total industry volume around 100 million units. Guess what, that's kind of where we came in and we executed very well on that. We had a little bit of less market share in the fourth quarter there ourselves, but we are the leader in WCDMA. We are number one. And looking at -- you mentioned QUALCOMM's comments in terms of looking at kind of the strength there, and then we see good growth in '07. And remember, we've talked about it before, that by the end of '07, we are probably not going to be speaking a lot about WCDMA's distinct market and the reason for that is exactly as you implied with your question. It is spreading throughout the portfolio. It is coming down in the price points and that's a good thing. And that's the normal thing as you go through the evolution, whether it be from 2G to 2.5G GPRS, EDGE, and now WCDMA. And again, that's one of the things that we pointed out. As long as we can execute well like we have to-date in the WCDMA market and have the broadest of the portfolio across all the price points, then that's going to benefit Nokia all well self constant.

Next question, please?

Your next question comes from Has Malik with Citigroup. Has Malik - Citigroup: Thanks very much. Can I ask a question on the timing of the ramp of new products? And specifically, if you look at the N95, the 6300, and the Barracuda, respectively when would you hope to be it kind of a full quarterly commercial run rate in volume terms for each of those products? Olli-Pekka Kallasvuo: Okay, Olli-Pekka here. So, when it comes to the 6300, so we started selling that or shipping that product on Monday of last week, and we are ramping up. And in fact, if I look at the ramp up, it's proceeding well, and also the demand for that product in the marketplace is very, very good. I think it really will be a hit. Now N95, we have said that we will -- but of course, having said that, we always have to remember that a product is not ramp up to the full volumes in two or three weeks. It takes a bit longer time. Of course we are talking about sort of big numbers here. So in that way, it takes a while, but the ramp up as such is going well. Now, when it comes to N95, we have said that we have introduced -- we will launch or start shipping in the first quarter and that continues to be the plan. It's a very complex product and the ramp up there is a bit slower than with the products like 6300 which is easier to ramp up. And then the Barracuda, so to speak, that you don't even know the number yet. So, it will happen when that is ready.

Next question? Thanks.

Your next question comes from Mike Walkley with Piper Jaffray. Mike Walkley - Piper Jaffray: Hi, thanks. Rick, I just wanted to get a little more color on Q1 with a seasonal impact of lower devices, you may be walk us through how that might impact gross margin and then also with all of the new products launching should we expect sales and marketing as a percent of sales to be up sequentially given the lower volumes?

Yeah, Mike. As we said, we expect to see the seasonality that one has come to expect in the first quarter and then particularly offer good -- a very good finish in Q4. In terms of gross margins, as I said, we should expect a little bit of quarter-to-quarter volatility. And one of the things there is, is that your OpEx can come up a little bit as a percentage of sales in the first quarter when you look at the devices, because again, we need to work this through the -- as we start to roll out some of these products that Olli-Pekka has referred to before. So, in that sense, we have kind of seen this picture before nothing particularly different here as we look at Q1.

Next question? Thanks.

Your next question comes from Stuart Jeffrey with Lehman Brothers. Stuart Jeffrey - Lehman Brothers: Hi, thank you. Question regarding Q1, just looking historically at normal seasonal trends for Q1, as it range between down 3% and down 18%, I just want to work out whether or not normal seasonality is somewhere in the middle of that, i.e. around 10% or where you think that might be? And then, added to that, also you are guiding fair market share to be flat in Q1 when traditionally it's down due to strength in, say Japan and Korea. So, I was hoping you could perhaps talk a little bit around why your market share will be flat sequentially in Q1? Thanks.

Yeah, Stuart thanks. In terms of giving predictions for the volumes on Q, we don't do that and essentially, if I nail in the percentage decline there, what we see there that’s given that kind of guidance. So it's -- we've seen you can kind of do the averages of the seasonality on the Q and really can't help you out any more on that. I am afraid in terms of the seasonality. In terms of market sharing, we said we expected roughly flat Q-on-Q. And again that’s going to be factor of how we do on some of these ramp ups, particularly, and how well do they [seep] in the marketplace.

Next question please.

Your next question comes from Richard Kramer. Richard Kramer - Arete: Thanks very much. Two simple questions for Olli-Pekka. The first one two areas that may be should have been better in ’06 were surely the US market and the enterprise business. Can you tell us what’s going to change in '07 to turn both of those businesses around? Is it a new product portfolio, a new approach to the markets, a different approach to operator relationships, and may be give us some sense of what the plan is there, and then may be a wider question slightly that’s my OPEC about the quarter. But if you look out for the next two to three quarters, several of your major competitors are somewhat constrained by the difficulties that they ran into the backend of last year. How do you approach the competitive situation in terms of market share and portfolio for the next two to three, four quarters, is this a chance for you to solidify market share gains or extend them, do you think there is a chance to put some specific pressure on some of your competitors, and how much you use various issues like price and product portfolio in that respect? Olli-Pekka Kallasvuo: Okay, thank you. I'll start with the U.S., then enterprise, and then competition. So, the U.S., obviously, it has been a bit painful and the market position is really nothing to [proud] for about. At this point of time, I acknowledge that, but then again we have really taken action here and I would like to take up three things that are available here. One, you remember in the summer of last year, we communicated we will start making US market specific products and we setup an R&D center in San Diego to do that. That’s a big investment. And the results from that investment will be visible during the course of this year. The other important item that is relevant here is what we are doing in CDMA. Again we may be -- in my opinion, even with the insight, even better this season in the summer to ramp down our own R&D in CDMA and our own manufacturing and move to a different part a model there, simply because we were not able to become competitive in that market and we are -- we have been now executing that change in strategy basically and again once that sayings has been implemented, we believe we can start ramping up our CDMA position, especially in the US when it comes to that approach. And the third thing -- and I don’t think this has gotten the -- really the attention it would have needed. The third thing that is relevant here is, we definitely -- extremely happy with the announcement with Sprint to become their systems supplier when it comes to their WiMAX fourth generation network. And we have at that point of time also of course very much made it possible for us to enter as a handset supplier as well with Sprint, as that they will ramp up there. But as since they -- it's a bit longer term, yes. But definitely, we will be strategically extremely important and relevant to our position in the U.S. On the top of these later moves, we are of course working very actively day-to-day with the career industry and with the alternate channel, and you know, it's -- that have a lot of attention there. Then enterprise, it's very clear that we are not happy with the situation there. You can see that when you look at the -- look at the [DFL] and it's very clear that the -- we must be able to make that business profitable. And we did indicate or estimate in the capital markets today that we will reach breakeven during the first half of '07 and that definitely continues to be the plan there. And here, it's very clear that we need to intensify many efforts in that business. And it's really a question about implementing, implementing, implementing, and in that conjunction also make some strategy decisions that we are working on. We remain committed to the enterprise business and market when we see an opportunity there, then the competition. So, I think, maybe even implying or indicating something like that, but this is definitely the time to turn up heat, slowly, slowly, slowly, turn up the heat and put pressure on competition. On one hand on a very positive way, like -- like investing in marketing in a very selected way where we feel we can get the biggest impact, but also on overall basis because we will turn up heat here. And, I think simply take the benefit of the situation. I think we can be very competitive and we need to exploit that.

Next question, please.

Your next question comes from Gareth Jenkins with Deutsche Bank. Gareth Jenkins - Deutsche Bank: Yeah. Hi, perhaps a question for Rick. Just noticed that your networking capital movement in Q4 were actually positive and I wanted to understand the dynamics, but not have been to understand that your inventory -- your book inventories fell about EUR 700 million sequentially. And, I just wondered how much of that is handset related, how much is just actually on the infrastructure side, where you had obviously negative working capital move through the course of the first nine months and they are actually now getting to a stage where they've got the scale and the people on the ground to do the job? So, if -- yeah, that's it.

Yeah, Gareth, thanks for that and as I mentioned one of the really -- among many good developments in the fourth quarter was this better efficiency on the networking capital and then driving that to cash flow. As I talked last quarter, and we had some build up in inventory, both in net, which I said was really somewhat aberrational. In other words, it was way ahead of what would just be a normal seasonal build and that was moved -- we are working through some buildups in certain markets, certain new markets force. And that melded away in the fourth quarter. The guys did a great job of doing what they promised they do, is getting that straightened out down to lower levels and that was a big part of the benefit in Q4. Also on the device side, of course, we brought inventories up in the third quarter in anticipation of the great volume of 105 million units. And that turned into receivable, as it should in the fourth quarter, but also we're doing little better job both in networks and in the device business of collecting our receivables a little sooner. So, that’s what accounted for that positive improvement in the fourth quarter on networking capital driving the $1.7 billion in operating cash flow. Gareth Jenkins - Deutsche Bank: Great, thanks

Next question, please?

Your next question comes from Sandeep Malhotra with Merrill Lynch. Sandeep Malhotra - Merrill Lynch: Thank you. I have a question for both Rick and Olli-Pekka, on your Internet strategy. It seems like in 2006, you did couple of small acquisitions Loudeye and gate5, what is your current thinking on role of larger Internet acquisitions to beef up that strategy? And a follow-up question is, currently you have an open platform approach in the area of converged devices, the high-end Internet-based multimedia devices, it seems that your new competitor Apple is deciding to adopt a close approach. Could you comment on the merits and demerits of an open versus closed approach? Olli-Pekka Kallasvuo: Yeah, Olli-Pekka here. It's -- I spoke at the Capital Markets Day about the Internet strategy and I said we will [impress] consumer Internet services, we can do it alone, together with a partner, or we can even enable other people to exploit that business opportunity. When you are speaking about Loudeye and gate5, yes, it was a small acquisition. But I believe those really can be the beginning of something big. I mean that way -- that continues to be the thinking here. We have a lot of capabilities in-house. We acquire small companies to complement our offering and build a business out of that, and I believe that it will be a very viable strategy, bearing in mind the fact that there are 850 million in this world carrying Nokia mobile device and increasingly many of those devices are Internet capable. I think that we have got the ingredients of something big in there. Then, the other question relative to Apple, and I don't think that's what we have heard so far here is something that would in anyway necessitate us changing our thinking when it comes to the openness and when it comes to our software and business and the experience approach. The fact that Apple is entering this market, in general, I think will stimulate this market. It's very clear. The fact that we will see multipurpose devices from many manufacturers, I think it will be good for the industry and in that way, I very much welcome that. Sandeep Malhotra - Merrill Lynch: Thank you.

Two more questions please. Next question? Thanks.

Your next question comes from Mark Sue with RBC Capital Markets Mark Sue - RBC Capital Markets: Thank you. Rick, can you help us frame the EPS impact from the ongoing litigation with QUALCOMM, both from a reduced royalty rate point of view and also the increase litigation cost? And separately, how does a company enforce an injunction in over a 100 countries?

Yeah, Mark. No, I can't quantify the litigation costs or the impact on any possible settlement with QUALCOMM in the EPS. We are working, as we said, in good faith to come to an agreement with them, but we can't predict the time on that. And as I said before -- laid out, I think pretty clearly in terms of what our accounting is going forward, I am not able to add any more than that, because there isn't any development that has changed that. And we certainly aren't running the litigation costs that I saw that they disclosed, nowhere near it. In terms of enforcement and injunctions, gosh, I don't know, I am not probably properly brief to say how do you enforce them in a 150 countries. But I think the two points that remain relevant are we don't believe when you are operating under an agreement that has fair reasonable and nondiscriminatory that an injunction is likely against us, and we are in court working to prove that point. So, as we said we before, we don't believe that there is anything like a high risk of injunction of our products in a number of countries, if we don't have agreement come April. And the enforcement, if you have a valid decision, if we have one against somebody or others is under the normal local laws. Mark Sue - RBC Capital Markets: All right. That’s helpful. Thank you and good luck gentlemen.

Thanks Mark. Last question, please?

Your final question comes from Christine Armacost with Lazard Capital Markets. Christine Armacost - Lazard Capital Markets: Thank you. I wanted to ask a question about 3G. Do you think that you saw in the fourth quarter we have heard that careers were not pushing 3G as much, because typically consumers buy lower priced phones and they decided to promote and cater to consumer purchasing for the holiday season is having an impact on 3G and that's what makes you more bullish going forward? And are there any regions in particular where you think you can gain share in 3G going into 2007? Olli-Pekka Kallasvuo: Yeah, Olli-Pekka here. It's very clear that the overall movement to the [DSPC] direction is happening. It is there. There is no doubt in my mind about the direction. As Rick pointed out earlier, it will come to lower price points as well and in that way we will enable the operator industry to push 3G even more. And we are actively sort of contributing to that with our road maps. We can be competitive in 3G in all price points, that's the thinking. And in that way the direction here is very clear. And we as the market leader I think would benefit from. Christine Armacost - Lazard Capital Markets: Do you have a set goal in terms of the number of new phones for 2007 that will be 3G enabled?

Number phones that will be 3G enabled as a percentage is it -- do we have a majority of our new phones would be 3G enabled, Bill help me out on this from here.

We haven't disclosed that, but I think after the quite a few of the traditional GSM set would be WCDMA.

But let's remember that there is a very good market in the traditional GSM business and across our portfolio. So, I think the numbers that we would do isn't quite so important. But back to the point that we've talked that recover the WCDMA market in a wider range than anybody else and that's going to be increasing in it's breadth in 2007 and really helping to drive the market. Thank you.

Thank you. Ladies and gentlemen, this concludes our conference call. I would like to remind you that during the conference call today, we have made a number of forward-looking statements that involves risks and uncertainties. Actual results may therefore differ materially from results currently expected. Factors that could cause such differences can be both external, such as general economic and industry conditions as well as internal operating factors. We've identified these in more detail on pages 12 to 22 in our 2005 Form 20-F and in our press release issued today. Thank you and have a nice day.

Thank you for participating in today's Nokia fourth year and full year 2006 earnings conference call. You may now disconnect.

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