Olli-Pekka Kallasvuo - President and Chief Executive Officer Rick Simonson - Chief Financial Officer Bill Seymour - Investor Relations

Gareth Jenkins - Deutsche Bank Phil Cusick - Bear Stearns Tim Boddy - Goldman Sachs Tim Long - Banc of America Securities Hasnain Malik - Citigroup Investment Research Thomas Mike Walkley - Piper Jaffray & Co. Jeffrey Schlesinger - USB Larry Harris - Oppenheimer & Co. Sandeep Malhotra - Merrill Lynch Paul Sagawa - Sanford C. Bernstein & Company, Inc. Kulbinder Garcha - Credit Suisse First Boston James Faucette - Pacific Crest Securities

Good morning. My name is Ilene and I will be your conference operator today. At this time, I would like to welcome everyone to the Nokia second quarter 2006 earnings conference call. (Operator Instructions) Mr. Seymour, you may begin your conference.

Ladies and gentlemen, welcome to Nokia's second quarter 2006 conference call. I am Bill Seymour, Head of Investor Relations. Olli-Pekka Kallasvuo, President and CEO of Nokia, and Rick Simonson, CFO of Nokia, are with me today. During this briefing and call, we will be making forward-looking statements regarding the future business and financial performance of Nokia and 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 and our press release issued today. Our aim is to finish the call in approximately one hour. To view the supporting slides while listening to the call, please log on to nokia.com/investor. For your convenience, a replay of the call will be available beginning two hours after the call ends until 12:00 a.m. New York time on Tuesday. The call will also be archived on our website. With this, I will pass the call over to Olli-Pekka. Olli-Pekka Kallasvuo : Thank you, Bill. Ladies and gentlemen, in the second quarter Nokia delivered another quarter of strong year-on-year growth in net sales, operating profit and EPS and, which is so critical to our success, our device product portfolio continued to steadily improve. We started volume shipments of several new products, including important ones in the mid-range and also in the Nokia Nseries multimedia computers. We started initial shipments of Nokia Eseries as well. Despite these positive developments the quarter was mixed, as Nokia networks margin development was disappointing. I will address this issue shortly. There are a number of other things to highlight for the second quarter. Estimated industry quarterly device units of 230 million were up 7% sequentially and up 26% year-on-year. Nokia quarterly device units were 78.4 million, up 4% sequentially and up 29% year-on-year. Nokia estimated device market share was 34%, down from 35% in Q1 '06 and up from 33% in Q2 2005. Nokia device ASP of 102 EUR was down from 103 EUR in the first quarter of '06. In the second quarter, Nokia made two significant strategic announcements. We announced our intention to restructure our CDMA business, following the decision not to proceed with the proposed CDMA company with Sanyo. Once completed, the restructuring is expected to have a positive impact on our operating margins. Also during the quarter, Nokia and Siemens announced a definite agreement to merge Nokia Networks business growth and Siemens carrier-related operations into a new company, creating a powerful leader of the wireless and wireline carrier market. Let's now look at the overall device market and our device business. The mobile device market continued to show healthy growth in the second quarter and continues to look strong for the balance of the year. The second quarter mobile device market was estimated to be 230 million units, representing a year-on-year volume growth of 26% and a sequential increase of 7%. The slide shows our estimate of the regional and technology markets statistics for the second quarter. I will mention just a few of the markets where there were significant developments. The emerging markets continued to be the growth driver for the industry, with markets like Southeast Asia Pacific, India, Middle East and Africa seeing extremely strong growth in the second quarter. The wideband CDMA market continued to see good momentum and was up 16% sequentially to approximately 22 million units. We believe the momentum in the wideband CDMA market will continue in the second half. On the other hand, as we discussed in conjunction with our CDMA restructuring announcement on June 22nd, recent developments indicate that the CDMA industry unit growth may be negatively impacted in the future as some CDMA carriers built out GSM and wideband CDMA networks. For a look at device business, our estimated device market share was 34% in the second quarter. In terms of specific markets for the second quarter, the sequence of decline in Nokia's second quarter estimated market share was almost entirely caused by our lower sequential volumes in North America. Nokia’s global market share would have been up sequentially if our North America volumes were only stable. The decline in volume was impacted by a significant order cancellation at one of our customers in the prepaid market. We have addressed this specific issue and hope to deliver improved performance in North America this quarter. On a positive note, Nokia's global market share continued to look solid overall. In China, we estimate that we continued to gain share in the second quarter, with now 12 quarters of uninterrupted market share gains. Our market share in China is nine percentage points higher than in the second quarter of last year. We also strengthened our estimated market share in APAC, Asia Pacific, driven largely by our strong and improving sequence of share in India. We continued to build on our excellent wideband CDMA [inaudible]. Our wideband CDMA volumes grew almost 50% sequentially in the second quarter, yielding a considerable increase in our estimated global wideband CDMA market share, taking it to well over 30%. Our wideband CDMA sale was up in all major markets, with our European share specifically seeing a very significant increase. Our position in the fastest growing markets of the world continued to be extremely strong. We estimate we are number one in India, number one in Middle East and Africa, number one in Southeast Asia Pacific, and number one in wideband CDMA. Nokia's second quarter device ASP was 102 EUR, down 1% sequentially. The second quarter ASP was driven by a higher proportion of lower-priced devices and a late ramp-up of new mid-range products balanced by strong sales of higher-priced products, including Wideband CDMA and the Nokia Nseries devices. We had a lot of product highlights for the second quarter. For the second quarter in a row, the Nokia N70 wideband CDMA multimedia computer was Nokia's highest revenue and margin device. After only starting volume segment in the second quarter, the Nokia N80 high-end wideband CDMA camera device became a top ten margin contributor for Nokia. The Nokia Nseries portfolio of devices continued to be very successful, with volumes of 3 million units in the second quarter, up almost 60% sequentially. The Nokia 6280 wideband CDMA slide-phone was our second highest device in revenue. We estimate that the combined volumes of the Nokia 6280 and Nokia N70 captured 20% of the global wideband CDMA market in the second quarter. The newly introduced Nokia 6280 and Nokia 6111 slide-phones, and Nokia 6101 clamshell phone, are good examples of us successfully expanding our mid-range product portfolio beyond the [inaudible] product, the Nokia 6230i. We continue to see healthy [revenue] of our entry level product portfolio. The combined volume of the Nokia 1110 and the 1600 in the second quarter was approximately double that of the older platform, Nokia 1100. In an environment of heavy competition, our entry-level business continues to execute very well, helped by a solid product portfolio, leading brand, leading distribution, and lowest cost. During the second quarter, Nokia's 3250 music phone sold over 1 million units. Overall for Nokia, our music device shipments in the second quarter were about 15 million units, up 25% sequentially. Also during the second quarter, we started the initial volume ramp of the Nokia Eseries. The Nokia Eseries saw a good demand and sell-through during the quarter. The following products are expected to be significant in the third quarter. In the entry level, the high-volume devices are expected to be the Nokia 1110 and the 1600 families. With the order platform, Nokia 1100 is continuing its planned ramp-down. In addition, we have just started segments of the new entry level Nokia 2610 and 2310 phones. In the mid-range, we expect the Nokia 6280, 6230i, 6101 and 6111 to continue to sell in high volumes. During the third quarter, we also expect to see volume shipments of the newly introduced Nokia 6233 family of midrange wideband CDMA phones, the Nokia 6131 clamshell and the Nokia 6126 clamshell for the U.S. market. In addition, we expect the newly-introduced Nokia 6151 low-cost Wideband CDMA phone will start initial shipments during the third quarter. In the high-end and in Smartphones, the significant products are expected to be Nokia N70, N80, N72, multimedia computers and Nokia fashion collection as well. We also expect volume shipments to start for the Nokia N73 high-end camera device. Finally, for enterprise, as I mentioned we expect to see the Nokia Eseries continue its volume ramp, including significant volumes of the Nokia E61 and the new Nokia E50 -- a great, great product, by the way. Over the past 18 months, we have completed a very comprehensive segmentation and categorization project. This work has the objective of making choice easy for consumers and more tightly defining our product portfolio against defined consumer needs. The segmentation study involved over consumer 41,000 interviews, generated 6 billion data points and identified 12 unique segments that we will focus our efforts against. From these 12 segments, we identified four broad categories that we will activate at retail and online. We believe this has enabled us to even more properly identify the key buying triggers for different types of customers and consumers and will help us to create a more focused, balanced and improved product portfolio in the future. You will see examples of this approach reflected in many of our activities this fall. On to the Nokia Networks, Nokia Networks has successfully executed its strategy of building scale, taking market share, accelerating consolidation and building our footprint in the growth geographies. However, despite both healthy sequential and year-on-year net sales growth, Networks’ margins were disappointing. Lower year-on-year profitability, excluding the special item, was caused by our concerted efforts at gaining market share, a greater proportion of sales from the emerging markets and a higher share of services sales. Here are some examples of what I mean. In an effort to drive our share and accelerate consolidation of the market, we have recently and, specifically in the second quarter, executed a number of moves to go after share gains at established operators. However, these actions have not come at an initial cost to gross margin, as you take losses upfront. In the last few years, there has been a big move in network sales into emerging markets where we have historically underperformed. In two years, Networks’ net sales in the primarily emerging markets of APAC, Latin America, and Middle East and Africa, grew from 26% to 41% of network sales. In India, for example, over the last two years, our estimated market share has increased from the single digits to the mid-20s. During the same time period, Europe was down from 44% to 36% of network sales. What makes this trend relevant to the second quarter performance is that the emerging markets in general carry lower than average gross margins. In addition to growth in emerging markets, Networks Services business, which also carries a lower gross margin than average, continued to grow. In the second quarter services, including services-related software, for the first time accounted for more than 40% of Network sales. The last couple of quarters have highlighted the requirements for scale in this business, as is evident by the two recent merger announcements in the industry. We believe that the top two to three players with necessary scale will compete for the lion's share of the market. The rest of the players will become increasingly sub-scale and find it extremely difficult to invest and compete, in turn creating an environment of increased market share opportunities for the larger players. The current and continuing dynamics in the infrastructure market provide further validation for the creation of Nokia Siemens Networks. This merger will provide a new company with needed scale and more competitive convergence portfolio, and we believe it will further stir industry consolidation. The scale advantages of the merger, coupled with the significant restructure program planned, are expected to deliver margin benefits leading to significantly improved profitability. Now, Rick will cover the financial results in detail. Rick Simonson : Thanks, Olli-Pekka. In the second quarter, Nokia net sales were up a very strong 22% year-over-year. Excluding Telsim, operating profit was up 27% and diluted EPS was up 35%. Also in the second quarter, R&D was down 200 basis points year-on-year, and sales and marketing costs were down 150 basis points, both as a percentage of net sales. In the second quarter, gross margins were down sequentially 90 basis points to 33%. The decrease was driven primarily by the sequential decline in Networks’ gross margin, as Olli-Pekka just explained. Gross margins for the devices businesses were down sequentially, with the mobile phones business group contributing most of that. The decline in the mobile phones business group gross margins was partially offset by a sequential increase in the gross margins of the growing multimedia division. Sequential gross margin decline in mobile phones was primarily driven by a combination of shift in our portfolio to lower gross margin entry-level products and a later ramp-up of a few of the significant mid-range phones. These mid-range phones started volume shipments only towards the end of the second quarter and are expected to deliver good volume in the third quarter. As we said in last quarter's call, you should expect and will see some volatility from quarter-to-quarter in our device gross margins, as the second quarter demonstrated. However, we continue to believe that we have some proof points to our view that device gross margins can stabilize. Here are some of the continued drivers of gross margins, in our view: Some of the negative drivers on gross margin: Reported group operating margins were up 90 basis points sequentially to 15.3% in the second quarter. Excluding the special item, operating margins were 12.5%. The decline in operating margin, excluding the special item, was driven by the gross margin factors as discussed but also significantly by substantial sequential increase in marketing, specifically in multimedia and mobile phones, and it is as we predicted and previously communicated with you in the first quarter call. Marketing expense was up 150 basis point sequentially as a percentage of sales. Most of the increase was in multimedia, as they launched the campaigns around new products like the Nokia N80 and N91. We continued the successful Nokia Nseries campaign. Mobile phones saw a significant increase in market as it launched promotions on a number of important products, like the Nokia 3250 music phone. In terms of ASPs, the second quarter ASP was 102 EUR. Some of the factors that continue to drive ASPs in the near future: Negative drivers for ASPs continue to be the balancing factor of growth in the emerging markets, which are driving growth for Nokia and the overall industry but at lower ASPs. As we have said before, we believe that is good on balance but it does bring ASPs down. Again, we are going to retain the necessary flexibility to be as competitive as we need to be in all markets. As I have said for all of 2006, we continue to expect the device industry to experience value growth, but expect some decline in industry ASPs, primarily reflecting the increasing impact of the emerging markets and competitive factors in general. Just a few reminders on specific financial items for 2006. We estimate and continue to estimate our tax rate will be approximately 27%. Estimated cap-ex approximately $800 million EUR, and estimated depreciation and amortization in total approximately 800 million EUR. The impact in the second quarter's special items to diluted EPS was a positive 0.05 EUR. So excluding special items, 0.23 EUR versus reported EPS of 0.28 EUR. The specific items, Networks’ operating profit included a gain of 276 million EUR, representing Nokia's share of the proceeds from the Telsim sale. As I mentioned earlier, operating margin excluding this special item was 12.5% versus reported 15.3%. I would also like to remind you of the charge that we are expecting to take in the third quarter, associated with the planned restructuring of our CDMA business. Our estimate for the plan restructuring charge is 150 million EUR. For your modeling purposes, this should be considered a special item. On currencies, the second quarter reported year on year net sales growth was 22%. At constant currency, net sales growth was 17%. Let's take a look at some of the balance sheet and cash flow items. Inventory was up slightly sequentially in the second quarter, accounts receivable down slightly sequentially, operating cash flow 896 million EUR in the second quarter, capital expenditures, 163 million EUR. Gearing our net debt to equity was minus 67%. We managed down our cash and other liquid assets as planned and as communicated through our continuing share buyback. Our cash and other liquid assets stood at 7.9 billion EUR at the end of the second quarter. During the quarter, we repurchased approximately 36 million Nokia shares, for a total of 603 million EUR. Looking forward in terms of second quarter and the full 2006 industry and Nokia outlook, Nokia expects industry mobile device volumes in the third quarter 2006 to be up sequentially, although to be less than the second quarter 2006 sequential increase. We expect Nokia's device market share in the third quarter 2006 to be approximately at the same level sequentially. Sales in our networks business are expected to develop according to normal seasonality in the third quarter. Nokia continues to expect the mobile device market volume to grow by 15% or more in 2006 from our estimate of approximately 795 million units in 2005. We continue to expect the device industries to experience value growth in 2006 but expect some decline in industry ASPs, primarily reflecting the increasing impact of the emerging markets and competitive factors in general. Nokia continues to expect moderate growth in the mobile infrastructure market, in euro terms, in 2006. We also continue to target an increase in 2006 market share in our mobile devices and infrastructure. Now, back over to Olli-Pekka. Olli-Pekka Kallasvuo : [inaudible] Since this is my first quarterly conference as the Nokia CEO, before we close the first part of the call, I wanted to cover some things I feel are significant for Nokia going forward. First, I would like to make the point -- Nokia knows what it takes to win and we will do what it takes to win. There are a couple of good examples of actions we have taken recently to this end. Our CDMA restructuring announcement was made after final recognition that the CDMA market is simply financially untenable, and in addition has challenging growth prospects. Over the last few years, we have invested a significant amount of money into our CDMA business. While ramping down our CDMA business was a difficult decision, it is clearly positive for Nokia, as we expect to see a significant benefit to operating margins. The other major example of Nokia taking action to improve its competitive and financial position is the network's merger announcement creating Nokia Siemens networks. This move is expected to deliver value for customers, to provide scale and financial benefits to the new company, and of course the parent companies as well. The CDMA restructuring and the networks merger are the two important factors that give us confidence that we can reach the medium term Nokia operating margins target we set forth for you last year. In terms of our device business specifically, we are not complacent and we will not voluntarily cede share to the competition. We are working hard in smart and rational ways to ensure that the competition has less room to maneuver, but I need to emphasize -- we believe that increasing share and profitability are not mutually exclusive. On IPR, we are taking action to make sure we are properly compensated for our leading IPR portfolio. To these ends, Nokia has in place a successful licensing program and we are working to ensure that we are paying what is fair and reasonable and nothing more. Nokia has built its IPR portfolio over the last 15 years, investing over 25 billion EUR in R&D and now we own over 11,000 patent families. We are the world leader in the development of GSM, EDGE, wideband CDMA, HSDPA and TDSCDMA. We have a robust portfolio in CDMA 2000. We have a solid patent portfolio in WiMAX and we hold numerous SN-SO patents in OFDM. However, as you know, Nokia is a net payer of royalties. Our negotiation position has become stronger as we have seen a major increase in our patent portfolio over the last several years. As current payment obligations expire in the future, we believe we will benefit from the strength of our portfolio when renegotiating some of our existing payment obligations. As we have always said, the winner in this industry needs great products. I believe our device portfolio has fundamentally improved over the last few years but I think we need to have the courage to admit that we are not where we need to be. We need to improve on things like design and thinness, and we are doing that. Second, Nokia's goal is to be the number one marketing and brand company in the world. Effective marketing and brand are extremely important ingredients for success. However, we will continue to target less volatility in our marketing spend while making the necessary investments to support our products and brand. Helping to reduce the marketing volatility, multimedia is coming to scale and will enjoy more leverage in the future. We have also incentives throughout Nokia aligned and in place, like marketing as a percent of gross margin, which we believe will drive greater efficiency of marketing, or better bang for the buck. Lastly, the device business system is highly complex. This is great for Nokia and we will continue to exploit this complexity. Giving validity to the challenges of competing in an increasing complex marketplace is that the industry has not experienced [inaudible] but has experienced significant market share consolidation over the last few years. Smaller players have been relegated to a niche position or an unsustainable and unprofitable existence. Nokia knows what it takes to win and our tactics and strategies support this. Over to you, Bill.

Thanks, Olli-Pekka. We now will continue with a Q-and-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 Gareth Jenkins with Deutsche Bank. Gareth Jenkins - Deutsche Bank: Hi, thanks. A couple of quick questions, if I can. One is just on the sub-50 EUR ASP market, can you give us a sense of what portion of your total volumes that was in the quarter? Secondly is just on the margin outlook for Networks in the second half of the year. Can you say what the trend will be H2 versus H1? Finally, just trying to quantify a bit more on the CDMA impact on the business. Can you give us a sense of how much volumes you expect to ramp down versus the ramp up in ODM? Thank you. Rick Simonson : In terms of the below 50 EUR ASP volumes, as we said last quarter, we were at around approximately 25% and that has gone up significantly this quarter, as we said. Of course that is what accounts for the growth, largely in the overall market, so that number is significantly above the 25% level. In terms of the CDMA impact, Olli-Pekka, perhaps you wish to comment there. Olli-Pekka Kallasvuo : Yes, I think there was a network question in between, but I will take this one as well. So the question related to our continuation in CDMA, and as we have indicated, so we will ramp down our own R&D and manufacturing in CDMA, but we do have plans to stay in the business through other arrangements, namely ODM. The target here is really to ensure continued presence in that marketplace and really participate in that business to the extent we feel makes business sense. So in that way, we will continue to be in that market. [Takes] of business plans, what are the estimated volumes and so forth, I think we need to communicate separately. Rick Simonson : Did you have another question? We did not catch it here, sorry. Gareth Jenkins - Deutsche Bank: Yes, it was just on the second half network margins, what the outlook is and whether you expect to see a significant pickup versus H1. Rick Simonson : Yes, again, we do not give quarterly estimates on margins in the different segments.

Next question, please.

Your next question comes from the line of Phil Cusick with Bear Stearns. Phil Cusick - Bear Stearns: I wonder if we could talk about North America a little bit. You mentioned that you had a significant prepaid cancellation. How should we think about you guys coming back here, not only in the low-end but also on more high-end devices going forward? Olli-Pekka Kallasvuo : Yes, that is right. In fact, if you look the situation in the second quarter, we had the cancellation we did talk about and that definitely had a big impact on our market share in the U.S. So in that way, the market share loss we had in the U.S. was not across the board but basically related to the cancellation here mainly. The GSM markets we do have in the U.S. basically continued to be on the same level we have had. Having said that, it is very clear that the situation and our position in the U.S. continues to be not satisfactory. We simply need to have even more focus as an organization on the U.S. and that is exactly what we are doing. We have several initiatives ongoing with different customers as we speak. Of course, one that relates to the cancellation, and I think we have taken care of that going forward. These several initiatives we do have I believe will continue to make it possible for us to improve our position. I personally continue to be extremely committed to making that happen and I will not rest until the situation in the U.S. is satisfactory. Phil Cusick - Bear Stearns: And the U.S….

Next question, please. Excuse me, can you repeat that, please? Phil Cusick - Bear Stearns: I am sorry, I was going to say on the U.S. cancellation, was that some particular weakness from that operator or was that them going to a different vendor, and maybe you have brought them back now? Olli-Pekka Kallasvuo : We simply had a cancellation and we cannot then speculate what the customer then did after that point, but as I have said, we believe the business relationship with that customer is back to normal and we can continue to do business. Phil Cusick - Bear Stearns: Thank you.

Next question, please.

Your next question comes from the line of Tim Boddy with Goldman Sachs. Tim Boddy - Goldman Sachs: Thanks very much. I wanted to ask about the market outlook for the rest of the year. If we look back in previous years at this stage, you have always committed to an absolute number, if I'm right, for the signs of the market. If we believe 15%, that’s suggests a very disappointing second half, or particularly fourth quarter, progression again compared to the past. Can you help us understand how you are seeing that? When you say more than 15%, what do you really mean? Are you concerned about inventory? Is it the economy or some of the conflicts we are seeing? Or is this just the beginning of the end of the net-add surprises we have been seeing for the last several years? Thank you. Olli-Pekka Kallasvuo : Basically, the fact that we now express our market outlook in a different way than what you were referring to -- I do not know even whether if we have had that practice, but anyhow, we express this in this way. The 15% or more over last year, and we basically reiterate that outlook with quite a lot of confidence now. In that way, the way we look at the rest of the year is basically very similar as when we made this announcement in the earlier part of this year, in the spring. I might add, I look at that number or that estimate with great confidence. Rick Simonson : I would add that inventories are fine by our view of the industry, so there is no mystery there, Tim. Tim Boddy - Goldman Sachs: Just to be more specific, I just wanted to ask about if you roll forward your estimates for Q1, Q2 and the prediction for Q3, you end up with perhaps 15% less than a flat-to-up Q4 unit volume. That is really what the question was about. Thank you. Olli-Pekka Kallasvuo : We seem to reiterate what we said -- 15% or more over last year.

Thank you. Next question, please.

Your next question comes from the line of Tim Long with Banc of America. Tim Long - Banc of America Securities: Thank you. If I could just ask a two-parter on the gross margin front. First, on the mobile phone, you said the 1110 and 1600 were twice the volumes of the old platform. I would have been expecting that to help the gross margin line a little bit more. Can you talk about the impact on gross margin there? Has there been a change to pricing for those products where the gross margin benefit is not what you were originally thinking it was? Or was it just that the volume impact overrode that? Secondly, on the enterprise side, if you could just talk about the strong sequential and year-over-year revenue growth, yet also a tick-down in the gross margin there. If you could just clarify what happened there. Rick Simonson : Tim, let me try to address this on the gross margin. The share of new products was a little bit lower and that had an impact here. We talked about that, where we had a little slower ramp in some of that in the mid-end. That is going to come on then in Q3. I hope that helps you understand that dynamic a little bit better there. Then in the low-end, as we have talked the last two quarters, a lot of the benefit of this rotation from the 1100 platform to the new 1110, 1600, has been reflected through the quarter. Of course, at the beginning of that when the volumes are smaller in the new platform relative to the old, you have a little bit more pricing premium between the two respectively. As we move through the quarters, you start to see that separation come down a little bit. Again, as we have said, we need to look forward as well that in the second half we are going to also start shipping products off yet our newer lower-cost chipset, lower-cost build of material for the low-end. So it is in that way that you see that happening. So we are very satisfied with how the 1110 and 1600 are performing in the market and against the competition. We do get a price premium on those products against similarly spec products by every measurement that I can see. In that sense, things are as we talked about. Then in third quarter, again some of the balancing drivers that we talked about are continuing to ramp on some of these mid-end devices. The Eseries coming up to volume. Again, we are going to be competitive in all the markets, as I said, so that is kind of where the balance is. In ES, again I think there we have talked about, we have a diverse, robust product portfolio announced and launched now in the enterprise group but we only reach real scale in the second half. Given the dynamics of that business, I think trying too draw too much from quarter-on-quarter gross margin development between first and second probably, I cannot get a lot of insight out of that to give you. Let's look at third quarter and fourth quarter when we had some real volume behind the E61, the E50 and some of the other products there, if I can, Tim, and we look at it that way. Tim Long - Banc of America Securities: Does it take gross margins a little bit as they ramp? Could that have been the quarterly impact? Rick Simonson : That would be one -- all other things equal, the growth in the new Eseries portfolio is going to be positive for us because again, we think we can run over all that enterprise business. They have a target of running around the 40% gross margin, and that is primarily made up of devices still, the balance of that business. Then you have some of the server and security business as well. Tim Long - Banc of America Securities: Okay, great. Thank you.

Thanks, Tim. Next question, please.

Your next question comes from the line of Has Malik with Citigroup. Hasnain Malik - Citigroup Investment Research: I just wanted to try and clarify two things that you said, Olli-Pekka. The first was on meeting your public medium-term margin targets. Am I to understand that you are saying that you need the CDMA restructuring and you need the Siemens deal in order to achieve those targets? In other words, you cannot achieve them on an organic basis? The second clarification is your written statement says that you are looking for a kind of broadly flat sequential global market share in devices. It sounds from your comments early on this call that you are probably expecting the U.S. share to increase sequentially. Does that mean you are expecting in another geography to see a sequential decline in market share? Thank you. Olli-Pekka Kallasvuo : The first one, really what we have said, and I think I can repeat that, I said these actions will help us meeting the margin targets we have expressed. In that way, I think it is kind of a speculation to think about what if, what if not, simply because we feel this definitely will have a positive impact and it may help us to meet. To say that we would not be able to do that without these, I think it is unnecessary speculation, in my opinion. The important thing here is basically the fact that we have taken action -- we have taken action that will help us to meet our targets. That is the bottom line, basically. Then we have the market share question. The market share indication or estimate we gave out, it is market shares on approximately the same level. I think that gives basically a lot positive related to target even higher. This is what we feel is a good estimate to be able to keep to the market place at this point of time, approximately on the same level. As I said, that leaves a lot of room for more ambition there, to work for and to target.

Next question, please.

Your next question comes from the line of Mike Walkley with Piper Jaffray. Thomas Michael Walkley - Piper Jaffray & Co.: Thank you. I wonder if you could just talk a little more about the product portfolio. You indicated one area you need to improve on is thinness. I wonder if you can provide some color on when we might be expecting more thin products from Nokia. Olli-Pekka Kallasvuo : Yes, I think I was very specific on that one and I really feel that we have to improve there. I think that improvement also will be an evolution. We have gotten thinner, we are becoming thinner and we will continue to do that. Of course, at some point every now and then you need to take steps that are outside the normal, take more risk and so forth. We have definitely, in the pipeline, products that we have taken a more aggressive approach when it comes to thinness in general. So it needs to be a combination of evolution on one hand and then taking bolder steps there as well. I hope we can prove in practice by producing new products that we have also been successful in that more aggressive approach, or line of action we have taken.

Thanks, Mike. Next question, please.

Your next question comes from the line of Jeffrey Schlesinger with USB. Jeffrey Schlesinger - USB: Thank you. Two questions, if I could. One is, Rick, can you give us some color on Europe? Disappointing growth in the first quarter and here actually being down sequentially as a market in the second quarter. What is your outlook for Europe? What are the key factors that could pick up that growth in the industry? Also, if you could talk a little bit, the mobile phones gross margins have been in pretty steady decline since the end of 2004. What changes that, or stabilizes as you said? You gave a list of those factors but despite that, we have seen a steady decline. Where does this really start to bottom out and the expectation there comes with the key factors that will start to do it from a timing perspective? That would be it, thank you. Olli-Pekka Kallasvuo : The European question, what I think is it is extremely important to note here, in many parts of Europe, is the fact that wideband CDMA as a technology, as a market is accelerating as we speak. That is basically happening in Europe. When you talk to the European operators on a daily basis, you really feel that this is something that will happen now. The industry has waited for this to happen for a long time, we all know that. But it is happening now. Definitely that is our stronghold. Our position in wideband CDMA definitely is second-to-none, by far. In that way, I feel if this will continue to happen, this definitely will improve our market position in Europe. We are really counting on that one. Rick Simonson : In terms of gross margins, as we said, there has been that pattern but we have proof points offsetting that relates exactly to what Olli-Pekka just said in terms of growth in the WCDMA portfolio. We are leading in that evolution. We are leading the industry in the quality of the products, profitability, the gross margin in WCDMA. In converged devices, we are leading there as well in the breadth of our product portfolio, our market share. Again, the gross margins are higher there. I think then you have to look a little further out as you look to devices that really are not primarily even cellular, engine-driven devices with multiple access. I think we have other opportunity there and that is part of the dynamics that we talked about that can be some of the positive drivers. Your comment about what history has been has been correct, but this is what we are looking to do to work against that going forward. Olli-Pekka Kallasvuo : If I may add to that, the question related especially to mobile phones, so I think when it comes to the priorities for the management in this company, really stabilizing the gross margins in mobile phones is definitely one of the key priorities, if not the priority. In that way, I think this question is very justified and good, and we are responding to that in practice.

Next question, please.

Your next question comes from the line of Larry Harris with Oppenheimer. Larry Harris - Oppenheimer & Co. : Thank you. A question with respect to CDMA is perhaps your reduced involvement in CDMA 2000. Relative to the improvement in operating margins, do you think we will see more of an improvement in gross margins, or more of a reduction in R&D? What types of changes will we see on the income statement? Rick Simonson : When we have been talking about this, we have talked about our moves and what we are doing in CDMA, reflecting the op-ex equation here and really ramping down and taking out that R&D and the marketing expense associated with a product portfolio that did not meet our aspirations. It is absolutely what we are talking about there, the primary driver being on the op-ex part of the equation. Larry Harris - Oppenheimer & Co. : More so than on gross margin? Rick Simonson : Yes. Larry Harris - Oppenheimer & Co. : All right. Thank you.

Thanks. Next question, please.

Your next question comes from the line of Sandeep Malhotra with Merrill Lynch. Sandeep Malhotra - Merrill Lynch: Thank you. I have a question about the dynamics in the low-end of the market. Our understanding is that the brand premium that Nokia was commanding in the low-end, especially in markets like India, has shrunk from 35%, 40% down to less than 10%. Given that the industry is consolidating and Nokia and the number two competitor are essentially gaining share, do you expect that competition at the low-end to be fairly rational going forward, or should we expect a fairly competitive price war type of environment? Olli-Pekka Kallasvuo : I think that is a very good question and nobody, of course, knows the answer there, but if I look at the market dynamics overall and look at the consolidation that is happening here, the way the two bigger players have really gained market position and market position-wise, I think this very much follows what I predicted to happen. You really need to have a market of certain level in order to have a sustainable position. If you do not have a sustainable position, really going after the market leaders in the low-end of the market is very, very difficult and has proven to be too difficult so far in the industry. If you look at the market position of Nokia in the emerging markets, there have been efforts to compete with us. There have been efforts to enter that market, but many people have failed doing that. I do not see how that dynamic really would change going forward. In that way, I basically believe the consolidation of the marketplace will benefit us going forward. This has all the time been one of the strategic reasons why we have been really investing in the low-end as well, to basically, if possible, suffocate competition in low-end. Sandeep Malhotra - Merrill Lynch: Just a quick follow-up, if I may. On the one hand, I think selectively we are talking about the low-end essentially moving to more color, and even the low-end subscribers demanding a bit more functionality. We have seen some of your competitors announce low-end color products, you know, people like Sony Ericsson and Samsung. What does your segmentation study tell us about the low-end? Will the actual low-end move a bit up-market, so that some of the other players we have talked about will have a shot? Or do you expect continued price declines? Olli-Pekka Kallasvuo : Of course, it is as the industry becomes more efficient, so will to the pricing as such and the low-end pricing as such has come down. We have been responding to that with lower cost, of course. When it comes to the nature of the low-end market and the segmentation and the different types of consumers that are participating there, we see the same type of segmentation being applicable there in those price points as elsewhere. People are different also there and do prefer a different type of phones. We are seeing this happen pretty low in the marketplace, in terms of the price point. Definitely this concept of affordable aspiration continues to be relevant there, meaning people continue to really be willing to spend quite a lot of their disposable income in mobile telephony. Really, they are doing that in different ways. I think we have to be even better able to apply our segmentation model in that part of the market. Rick Simonson : Sandeep, if I may, supporting that is the fact that then this more than 50% of the market in emerging markets is going to be replacement this year, as we talked about. When you have the brand loyalty, you have the quality that goes along with that first sale. That gives us a competitive advantage when they move up. Again, linking right to your question, we do not see that we are any worse off. We are actually better off when people move up the ladder because of that brand loyalty, the value propositions you have established in the low-end -- part of the virtual cycle. Sandeep Malhotra - Merrill Lynch: Thank you.

Thank you. Next question, please.

Your next question comes from the line of Paul Sagawa with Sanford Bernstein. Paul Sagawa - Sanford C. Bernstein & Company, Inc. : I wanted to ask a question on intellectual property rights. You noted on several calls now your intention to move from being a net payer to a net collector in intellectual property. I think most of the market seems to be highly focused on your relationship with Qualcomm and the contract that expires in April of next year. I am wondering how, or if you can dimension the issue a little bit more. Are there other companies with whom you have a significant payment obligation under your current contracts beyond Qualcomm? How many of them are there? How would your payment obligations to other companies compare to the general levels that you pay Qualcomm on an annual basis? Do those agreements have expiration dates in the foreseeable future that would give you opportunities for a renegotiation? Olli-Pekka Kallasvuo : Of course, this field, the intellectual property rights field, is very complex. In that way, it is very difficult to, without going into very much detail and without disclosing things that I should not disclose, to assess this in more detail. It is basically we pay royalties, we receive royalties. As we have improved when it comes to our patent portfolio, obviously we have been able to collect more and we have also become more active when it comes to collection, and we have the licensing program I was referring to. We will continue to be active and aggressive enough on that front. Of course, there is the other side of the coin here. Definitely if you look at that other side, it is a well-known fact that Qualcomm is important. It really means that is by far the biggest item on that side.

Okay. Next question, please.

Your next question comes from the line of Kulbinder Garcha with Credit Suisse. Kulbinder Garcha - Credit Suisse First Boston: Thank you. A question for Rick. With the segmentation, the new segmentation you are putting through in the device hat coming through, would it be fair to assume that we now start seeing some efficiency improvements when measured let’s say from an SG&A sales point of view? Not necessarily in Q3. I am just thinking the second half of the year and perhaps longer term, do we see that coming down as seen from efficiency improvements there helping profitability? The second question is, the Nokia buyback was really very low, it seems in Q2 in terms in terms of how many shares you repurchased. It would be fair to assume that accelerates from here on, or do you not intend to even fulfill half of the scheduled buyback you had authorized? Rick Simonson : On the sales and marketing efficiency, I think is what you are getting at, and as I mentioned there, year-on-year we have had very good improvement there. What we are looking to is, as Olli-Pekka mentioned, take out some of that quarterly volatility. We think we can do that through a combination of things. One, the multimedia Nseries and the whole business going to scale. You will see less impact but importantly the same thing happening in Eseries, once we get through the initial ramps. Specific to the segmentation -- absolutely. We have been talking to you about the fact that we believe that is going to allow us to get more efficiency at any level of product launch, and get more efficiency there by grouping some of the marketing around product families rather than every individual product launch. That would be one element where we would expect to get some efficiencies and continue to have this overall sales and marketing and total SG&A showing improvement as a percentage of net sales in the medium-term. In terms of the buyback, we executed as we expected there. There's no change of plans that we have communicated. We have the flexibility, we have the approval but again, we said that the overall in the cycle that began this quarter and will end at the end of the first -- excuse me, in the four-quarter cycle that began this year, that we would expect probably to execute at a lower level in terms of the percentage of shares that we buy back compared to last year, because we wanted to accelerate that. Hopefully you see we have brought down our net cash significantly since the beginning of 2004, as we said. We are largely on track, and then it is just tactical execution quarter to quarter. Kulbinder Garcha - Credit Suisse First Boston: Okay, and then just one final question to strategic for Olli-Pekka. Nokia in the past made a big deal about the gap that they have versus the number two player. The number two player is clearly closing that gap versus over the first half of this year. At what point does Nokia takes some serious decisions regarding being aggressive on price, do you think? If the product portfolio is not up to scratch in the next six months, is that a risk? Olli-Pekka Kallasvuo : I think the point you are taking up is very good here, because we have two aspects here, like you imply. On one hand, the absolute market share that we target, and then on the other hand, the distance to the number two, which currently is Motorola. Definitely I think we need to look at both. There is no way to look at only one of the two. That is what we are doing. Absolute market share is important but at the same time, we need to be aggressive enough in the marketplace also with regard to the number two. They are as well, but this does not in any way preclude the fact that I was referring to -- I do not feel market share, in the relative or absolute, is in no way contradictory to making right type of profits in the industry. Kulbinder Garcha - Credit Suisse First Boston: Thank you very much.

Okay, last question, please, Operator.

Your final question comes from the line of James Fawcett with Pacific Crest Securities. James Faucette - Pacific Crest Securities: Thank you very much. I wanted to quickly just touch back on emerging markets. In the past you talked about that you feel like those are good investments because of the increasing pricing that you typically see as people upgrade. I am wondering if you could shed a little light on if you continue to see that happening, particularly in light of what has been commentary of perhaps a bit weaker sell-through level in the emerging markets, and how we should expect that to impact your ASP outlook going forward? Thank you. Olli-Pekka Kallasvuo : Basically, if I simplify now a little bit, so that three strategic reasons to be present in the low-end, or in that part of the market, are the following: one, it is good business. We are making money there. The second is the fact that you are referring to the upgrade market, basically meaning if you are there and you can respond to the brand and quality promise to the consumer, you get loyalty. That is important when these people upgrade or replace and that continues to be valid. There is nothing that will have impacted that. Then, the third reason here is one I was referring to already earlier. We just do not want to give too much space for the competition in the low-end. In that way, that market share thinking, really the ability to manage that market, not give in, in that market, gives you sustainability and is of strategic importance.

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 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, and also in our press release issued today. Thank you and have a nice day.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.