Bill Seymour - Head, IR Jorma Ollila - Chairman, CEO Rick Simonson - SVP, CFO

Dhruv Mallick - Citigroup Tim Long - Banc of America Stuart Jeffrey - Lehman Brothers Thomas Walkley - Piper Jaffray Jeffrey Schlesinger - UBS Paul Sagawa - Sanford Bernstein Tim Boddy - Goldman Sachs Ittai Kidron - CIBC

Thank you for participating in Nokia's 2006 first quarter conference call. At this time I would like to welcome everyone to Nokia's 2006 first quarter earnings conference with our host Mr. Bill Seymour, Head of Investor Relations. (Operator Instructions) I would now like to turn the call over to our host, Mr. Bill Seymour. Mr. Seymour, you may begin. Bill Seymour: Ladies and gentlemen, welcome to Nokia's first quarter 2006 conference call. I'm Bill Seymour, Head of Investor Relations. Jorma Ollila, Chairman 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 in 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 midnight Tuesday New York time. The call will be archived on our website. With this, it's my pleasure to hand over to Jorma.

Ladies and gentlemen, I'm extremely pleased with the great performance of the Nokia team in the first quarter. Nokia had an excellent quarter with very strong year-on-year volume growth, net sales growth, as well as EPS growth. A robust market coupled with our strong product portfolio and excellent execution produced outstanding results in what historically has been a challenging quarter. There are a number of things to highlight for the first quarter. Industry quarterly estimated device volumes were 215 million, up strongly year-over-year, and with slightly muted seasonality. Nokia quarterly device volumes were 75.1 million units, down 10% sequentially and up a very strong 40% year-on-year. Nokia first quarter estimated device market share was 35%, up both sequentially and year-on-year. As announced last week, our device ASP for Nokia was EUR 103, up EUR 4 sequentially. First quarter profitability was very strong, and EPS was flat sequentially at EUR 0.25. Our main device business, mobile phones and multimedia, both had growth margins and operating margins that were up sequentially. I'm happy that we continue to make real progress in improving and expanding our product portfolio. In the very important U.S. market, where Nokia has struggled over the last few years, Nokia's net sales almost doubled year-on-year. Now, I'd like to make some brief comments about the overall device market. The first quarter was strong for the industry, showing a bit lower than normal seasonality. According to our preliminary estimate, the first quarter mobile device market was 215 million units, representing a year-on-year volume growth of 27%, and a sequential decline of 12%. The slide shows our estimate of the regional and technology market statistics for the first quarter. Here are just a few of the highlights. The wideband CDMA market was up 25% sequentially to approximately 19 million units. We see continued good momentum in the wideband CDMA market throughout 2006, as shipments for the industry reach deep into the high-volume categories of the mid-range. Markets like Middle East and Africa, as well as India, continued tremendous growth in the first quarter and are positioned for well over 50% overall growth in 2006. Next, I'd like to cover some of the market share dynamics of our device businesses. Our first quarter global device market share grew to an estimated 35%, up 1 percentage point sequentially and 3 percentage points year-on-year. Importantly, we believe we are also clearly gaining value market share driven by our expanded mid-range offering and success of our high-end portfolio. In terms of the specific markets for the first quarter, let me make a few comments. We did continue our momentum in the U.S. in the first quarter. Our volumes grew by over 100% year-on-year, resulting in significant market share gains, and our market share in the U.S. was well over 20% in the first quarter. Demonstrating our diversifying portfolio, the Nokia 6101 clamshell phone was our best-selling phone in the U.S. in the first quarter, and based on the success of this product and other Nokia products, we estimate we were number one in market share in the US GSM market during the first quarter. Driven by improvements in our mid-range product portfolio, our market share in Latin America was up significantly, both sequentially and year-on-year. We continued to gain share in China in the first quarter with 11 quarters of uninterrupted market share increases. According to GFK, Nokia has over 30% market share in China, and according to our estimates, our market share in China is 12 percentage points higher than the first quarter of last year. I'm also happy to report that Nokia's first quarter brand preference ranking in China reached an all-time record, further increasing the gap versus the competition. We also strengthened our position in APAC year-on-year, driven largely by our continuing strong share in India. Our Mid East and Africa share was up sequentially. While Nokia's share has been strong in this region, benefiting from Nokia's strong brand and excellent quality, one year ago Nokia's distribution system into this region was underdeveloped. We are now in the process of completely revamping our distribution system in Middle East and Africa, modeling it after the success we have had in China and India. We believe this approach is unique among our competitors, and we are starting to see the benefits in terms of visibility into the channel and presence with the consumer. We are now shipping directly to 58 countries in this region, opening Nokia offices and hiring Nokia people for retail, and there is more to come. Finally, our position in the fastest-growing markets of the world continues to be extremely strong. We are number one in India, we are number one in Russia, we are number one in Middle East and Africa, and we are number one in southeast Asia Pacific. I would now like to discuss the average selling prices and other portfolio dynamics of our device business. As we said last week, Nokia first quarter device ASP was EUR 103, up 4% sequentially. Our high first quarter ASP was impacted by a lower than expected proportion of lower priced entry-level products, and also, to a lesser degree, an increased proportion of higher-end products in our device sales, like the Nokia N-70. Now, a few product highlights for us in the first quarter. Our multimedia business group had excellent performance in the first quarter with 55% net sales growth reaching its highest ever operating margin of 18.4%. A lot of this was driven by the hugely successful Nokia N-70. The N-70 was Nokia's highest revenue and margin device for the first quarter. The Nokia N-70 was also the world's number one selling wideband CDMA device, capturing about 10% global wideband CDMA market share. We continued to see healthy renewal of our entry-level product portfolio. The combined volumes of Nokia 1110 and 1600 surpassed the volumes of the 1100 for all of the first quarter. Another important trend for us has been the expansion of our mid-range product portfolio. This is critical as it will help us gain share in the valuable mid-range and also highlight the continuing diversification of our product portfolio. For most of last year, we had one major mid-range product, the 6230i. We began expanding this in the fourth quarter with the introduction of our very successful clamshell phone, the Nokia 6101. During the first quarter we saw significant volume from two additional mid-range devices, the stylish Nokia 6111 and the wideband CDMA 6280 slide phone. The combined volumes of the new Nokia 6101, 6111, and 6280 were almost three times that of the 6230i. Nokia's fashion collection has also been a big success story for us over the last several quarters. Three new phones from the fashion collection, the L'Amour collection, started volume shipments in the first quarter. Driven by these new phones, the fashion collection volumes were up 70% sequentially reaching millions of units. The stainless steel 8800 slide phone continues to be a highly [productive] product while doing comparatively low volumes by Nokia standards. The 8800 is one of Nokia's top five devices in profits. Since the fourth quarter we have had other interesting developments with the 8800. We introduced a black version, and last week Aston Martin announced an exclusive version for their customers available for GBP 800. Finally, as you are aware, we are actively launching Nokia flagship stores in the very best retail locations in high traffic urban settings in major markets worldwide. A very innovative approach to retail where we can interact directly with consumers, show them our products, and demonstrate the value-added features of our devices. We think this concept extends our already high competitive advantages in distribution and customer reach. The first flagship store was opened in Moscow on December 9, 2005. I'm happy to report, even after being open for such a short period of time, our Moscow store is exceeding our high expectations across all metrics. This year, we plan to open five or six more flagship stores throughout the world, including in Helsinki and New York. Now, I would like to discuss our device product line-up for the second quarter. We expect the following products to be significant for the second quarter. In entry, the high-volume devices are expected to be the Nokia 1110 and 1600 families, with the 1100 family continuing to have big volumes but ramping down as planned. In the mid-range we expect the Nokia 6230i, 6101, 6111, and 6280 will continue to sell in high volumes. During the second quarter we also expect to start shipping the 6233 family of mid-range wideband CDMA phones, the slim 6131 clamshell, and the slim 6126 clamshell for the U.S. market. Operator feedback on these new phones has been extremely positive. In high end and smart phones, the significant products are expected to be the Nokia N-70, 6630, and 8800, and the recently introduced N-80. For enterprise I'm happy to announce that we have begun initial deliveries of Nokia E series with the Nokia E-60, E-61, and E-70, all are expected to start ramp-ups during the quarter. Now, I'd like to cover some of the business highlights of the Nokia Networks from the first quarter. During the quarter, Nokia won a major managed services contract with Hutchinson SI and also secured a $190 million U.S. network and equipment agreement with DU in the United Arab Emirates. These wins reinforced Nokia's leadership credentials in the fast growing managed services segment, where Nokia now has 39 references in 30 countries. During the quarter Nokia's 3G customers, Wataniya in Kuwait and T-Mobile in Germany opened their commercial HSDPA networks. During the first quarter Vodafone selected Nokia as a preferred IP multimedia subsystems, or IMS supplier. Also in new growth markets Nokia won the $170 million US GSM expansion deal with Henan MCC in China; an MSC service system contract with Telefonica Moviles in Ecuador; and a GSM EDGE network deal with Astelit in Ukraine. During the quarter Nokia announced contracts with four new customers. Cable and Wireless, DU, Telefonica Moviles Ecuador, and Finland's Aina Group. Finally at 3GSM in Barcelona, a number of new frequency variants were announced for Nokia small innovative and modular Flexi wideband CDMA base station. Now I will hand it over to Rick for him to cover the financials in a bit more detail.

Thank you, Jorma. Ladies and gentlemen, first, P&L. In the first quarter net sales were up a very strong 29% year-over-year and were down an unusually light 8% sequentially. Gross margins were down sequentially 20 basis points to 33.9%. The decrease was driven by the sequential decline in networks gross margin which is predictable given the typical seasonal drop in net sales. Gross margins from global phones, multimedia, and enterprise solutions were all up sequentially. We are encouraged by gross margin development in the first quarter in our devices business. We believe this gives some proof points to our view that device margins gross margins can stabilize. However, as I've said many times, you suspect and will see some volatility from quarter to quarter in our device gross margins. Let me talk about some of the positive drivers for gross margin. First and foremost our product portfolio continues to improve, especially important in the low end and the mid-range given the growth dynamics in the market. We are also seeing benefits from the growth of value-add markets like wideband CDMA, smart phone, multimedia, and enterprise. Some of the balancing drivers on the other hand for gross margin is we have to take into account we will be as competitive as we need to be in all markets, including in emerging markets. We need to have an ever more competitive product portfolio, and particularly on design elements like thinness as you're starting to see come into the portfolio in greater numbers. The reported group operating margins were up 120 basis points sequentially, 14.4%. Excluding special items operating margins were 14.6%. The improvement in the margin was driven by mobile phones and multimedia, which had a combined operating margin including the special items of 18.5%. That's up 190 basis points sequentially. Operating expenses were down 140 basis points sequentially as a percentage of sales to 19.5%. So whether you look at the reported or the clean number, the OpEx decline was significant and more than one might expect during a typical first quarter. As you can see from the numbers, research and development was down slightly as a percentage of sales, but marketing was down 140 basis points. This decrease in marketing was primarily caused by delayed spending on some programs associated with new product launches and targeted savings and efficiencies in our planned spend. The majority of these marketing programs have been pushed into the second quarter and as a result we expect a material sequential increase in marketing both in the absolute and as a percentage of sales in the second quarter. Most of the increase is expected in multimedia as they launch campaigns around the new products like the Nokia N-80, the N-91, and they continue the overall successful Nokia N-series campaign. Mobile phones is also expected to sea an increase in marketing as it launches a number of new important new products like the Nokia 3250 music phone and the 6131 slim clamshell product. As predicted earlier, the first quarter was a challenging one for Enterprise Solutions as they lost EUR 66 million, including the EUR 8 million charge. As Jorma said, the Nokia E-series has started to ship and we should see those products ramp throughout the quarter. However, as we've discussed before, the Nokia E-series products are not expected to reach big volumes until the third quarter this year. Enterprise solutions profitabilities depending on getting more scale from shipments are the Nokia E-series and other products, thus the second quarter will be a challenging one as well. However we're really excited about the launch of the Nokia E-series product and the strong reception from operators who are ranging these products; and enterprises that are ready to take them into their IT networks is very encouraging. I'd like to expand a bit on what Jorma said on ASPs. The first quarter EUR 103 ASP was higher than we expected for the quarter. What I'd say is in a perfect scenario, we would have preferred even higher volumes of entry-level products during the quarter. ASPs would have been slightly lower in that case. But we would have captured incremental volume and cash flow. So while ASPs are one relevant metric we obviously do not run our business to hit a specific quarterly ASP, but rather we endeavor to strike the appropriate balance in order to capture incremental cash flow. So rather than giving you specific ASP guidance we think it's more valuable to talk about the factors that could drive ASPs going forward. The most significant positive short-term drivers for ASPs include continued improvement of our product portfolio, the growth of the markets like wideband CDMA, and multimedia continuing to scale well and enterprise solutions moving toward scale in the second half of the year. Balancing those up positive factors on ASPs we have a desire to retain the necessary flexibility to be as competitive as we need to be in all markets. Another important balancing factor for ASPs is the emerging markets which are driving growth for Nokia and the industry, but of course it drives it at lower ASPs. That's the nature of the market. Finally, let me say just a few more words about the emerging markets. The emerging markets have become the majority of the overall handset market are the future growth engine of the industry. This year equalling approximately 70% of the industry growth. Nokia has competitive advantages of brand, scale, distribution, cost, network integration, and overall quality in these markets. Nokia's the leader in these markets and we've held our position well. We're also seeing benefits of our leading position in emerging markets in the rapidly growing replacement market. We estimate about 50% of the units in the emerging markets are now replacement. That's a huge advantage to a company who has established the leadership position that Nokia has. Our leading position in emerging markets is a real asset to Nokia. We're not complacent and we'll continue to be very competitive in these markets. We like to win. A few reminders before I leave this slide of some specific financial items for 2006. We estimate our tax rate will be approximately 27%. We estimate CapEx will be approximately EUR 800 million, and we continue to estimate depreciation and amortization will total approximately EUR 800 million. Let me take a look at the first quarter special items as we always do. The net impact of special items on diluted EPS was negligible. In terms of the specific items, we had a EUR 14 million charge for the initial restructuring of the CDMA business in the mobile phones unit. This is in anticipation of our announced intention to form a new company with Sanyo. We had an EUR 8 million restructuring charge in the enterprise solutions group. Both of these charges impacted operating profit. As I mentioned earlier operating margin excluding special items was 14.6% versus a reported 14.4%. Let me take a second to update you also on the TELSIM auction in Turkey. As reported previously, TELSIM was auctioned for $4.55 billion U.S. in December of last year. Nokia's proceeds from the sale at closing will equal 7.5% of the auction value, or $341 million U.S. We believe, but we cannot yet confirm, that we will be able to collect the proceeds sometime in the second quarter, subject to the final approvals of the relevant Turkish governmental authorities. For your modeling purposes the proceeds should continue to be considered a special item as we've discussed before. A very brief comment on currencies to go along with the slide here. The first quarter reported year-on-year net growth was 29%. At constant currency net sales growth was 23%, strong in either case. Now, let's look at some of the balance sheet and cash flow items. Inventory was sequentially up in the first quarter as you have expected build as we move through this robust market. Accounts receivable was down slightly sequentially. Operating cash flow EUR 967 million in the first quarter. Capital expenditure was at EUR 149 million. Gearing, or net debt to equity, was minus 82%. We managed down our cash and other liquid assets as planned and as communicated to you through our continuing share buyback. Our cash and other liquid assets stood at EUR 9 billion at the end of the first quarter. During the quarter we've repurchased 85 million Nokia shares for a total of EUR 1.4 billion in the quarter. With these buybacks we completed our 2005 buyback mandate with a total of 346 million shares repurchased for a total of EUR 5 billion. Our approved dividend of EUR 0.37 per share will be paid as of April 21. With this, like to hand it back over to you, Jorma.

Thanks very much, Rick. I would now like to cover the second quarter and full year 2006 industry and Nokia outlook. Nokia does expect industry mobile devices volumes in the second quarter 2006 to be up sequentially. We expect Nokia's device market share in the second 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 second quarter 2006. 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 industry 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. Nokia continues to target an increase in its 2006 market share in mobile devices and infrastructure. Let me make some closing remarks. This is indeed my last results conference call as CEO of Nokia, and it really does feel great to leave after a quarter like this one with strong industry growth, great results, and strong execution from the Nokia team. We were able to increase our market share both year-on-year and sequentially and we continue to target more gains for the rest of 2006. I'm really happy with our profitability in the first quarter and how we have increased the already significant gap versus our competition. We truly expect this dynamic will continue in the future. We continue to expand and improve our product portfolio. This is a continuous process and our ambition level is extremely high. I'm happy with our products, and I'm really excited about what's coming. Even as I leave my CEO role, my commitment to Nokia will remain strong, as I take my duties as Chairman of Nokia in a non-executive role. At the same time, I feel extremely confident that I'm leaving Nokia in capable hands. Olli-Pekka with his leadership team and our great Nokia team overall have the skills, the experience, and the passion to compete and win. Nokia is the premier growth company in this growth industry. The first quarter numbers back this up, and we expect this to continue. This Company is in great shape with great leadership in a great and dynamic industry. Thank you very much. Bill Seymour: Thank you, Jorma. We will now continue with the Q&A session. In order for us to be able to remember and answer the questions properly, please limit yourself to one question only. Operator, please go ahead. Question-and-Answer Period:

(Operator Instructions) Your first question comes from Dhruv Mallick with Citigroup. Dhruv Mallick - Citigroup: You delivered very strong margins across your device business. If we looked out later this year we should see perhaps the CDMA devices stripped out, we should see the 1110 we should see more N and E-series products. My question is, if I'm taking your marketing cost come forward why aren't you taking this opportunity to raise your medium-term margin target for the devices business?

Thanks for the question. Let's back up a little bit. When we set these targets that were medium-term targets originally a couple years ago, they were two to three year targets then. We updated them in the Capital Markets Day, here recently in December, and we said at both of those times these are very ambitious but they're doable. I think the first time we made that statement people thought ambitious was probably not the right adjective. They may have thought impossible. In December I think people were saying, okay, yes, they are ambitious, and we tried to point out the drivers that could make them possible. I just stand committed by that. We're running the business to both increase our scale and brand recognition. That means we have a desire to take market share. We're seeing a nice steady progress there. In terms of margin I think the first quarter, as I said, has some proof points to show that you can do both of those things. You can increase your market share, you can have the leading volume, and you can, in fact, manage your margins both on the gross margins and on the OpEx to deliver some strong results and value to the shareholders, so there's no need to update our targets. We've talked about some of the drivers up and down there. There's some volatility quarter to quarter, but when I think about volatility, that's not really a bad thing when you're in a growth market that had, what, 40% unit volume increase year-on-year. We had sales of 29%. So if a little volatility comes with that kind of growth then I'm all for it.

Yes. Perhaps as another process, what we try and do is have a little bit of stability in our target setting and have them truly as medium-term targets so that we wouldn't jump up and down on a quarterly basis -- hopefully even not annually, in every Capital Markets Day, but really keep them as medium-term targets so that you would perhaps make some mid-term adjustment on an annual basis as a minimum. So that's our ambition level in setting the target, but I really go along with the points that Rick mentioned. Bill Seymour: Next question, please. Dhruv Mallick - Citigroup: One quick follow-up. Rick, you mentioned that in a perfect scenario you may have gone for more volume and perhaps sacrificed a little bit of ASP. Can you explain that a bit more in terms of in that context what made Q1 less than a perfect scenario?

Well, I think it goes back to what I talked about. We're ambitious and we're all about achievement. I said in a perfect scenario we would have gotten more. This isn't about trade-off. It's just there's only so much you can do. In a perfect scenario we would have had some more volume there and the knock-on effect of that would have been that it tended to come from the lower ASP emerging markets and therefore you would have had a little lower ASP. I was just trying to again make the point that ASPs are an important metric, of course, but we're not slaves to ASP. We've talked about this before when ASPs have gone down sequentially. I felt it was fair to talk about it when they go up sequentially. Bill Seymour: Next question, please.

Your next question comes from Tim Long with Banc of America. Tim Long - Banc of America: Thank you. Just a question on the intellectual property front. Obviously you had the press release out today, and Qualcomm had something in their Q. I'm sure you can't talk specifically about that arrangement, but if you could just highlight us on what Nokia's strategy is for intellectual property? We're aware that there's a lot of patents in WCDMA that Nokia owns. Could you just talk a little bit about the leverage with other handset OEMs that maybe do not have the same intellectual property position? Also if you can touch on any leverage one way or the other with chipset vendors broadly and just maybe give us a sense how this could potentially be amortized for Nokia.

Yes, Tim, I think this is obviously a big issue, and there are both industry practice as well as our non-disclosure agreements which make us a bit restricted on our comments on a very specific basis, but let me make just a couple of observations which sort of will help you out, but I'm sure it will not be exhaustive, because this is a big topic, and merits a real long discussion. If you remember last summer, in July, in a conference call I did make some comments which, I note, not very many people noticed. It was sort of flown by, to my surprise, and I think the key comments were that, first, the observation that we have a number of patent license agreements for a number of standards with varying terms, conditions, and expiration dates for different mobile technologies. The terms and conditions of this agreements vary; however they are confidential as noted. When we look at those agreements in total, the case was in summer of 2005, and is the case today that we are a net payer. I also said that when we look at the existing payment obligations that will expire within the next two years, counting from July of last year, and obviously making much of that reference was to the April 9, 2007; we believed last year, we believe even stronger today that our negotiation position will be stronger than it has been in the past. The investments that we have made not only in GSM but also in CDMA, in TDS CDMA, in wideband CDMA, a number of other technologies have been mentioned, have been very significant in our operating portfolio, our intellectual property rights that we have in our possession put us in a pretty nice position, much better than was the case when some of these earlier agreements have been negotiated. So we feel pretty good on where we are. If we then look at how do we approach it, our position very clearly is that this position that we have built, we are a leader in many areas, we are very committed to licensing our IPR on very reasonable and non-discriminatory returns, the plan terms. We respect other people's IPR, and we are ready to reciprocate to participate in accessing the rights to such IPR, and we expect others to respect the similar principles. If you then look at how we have been able to approach all of this, we have also not only been much more active during the last three or four years particularly, but also much more efficient in supporting our rights, and one example being that a lot of discussion has been going around on pass-through rights. Nokia does not provide any pass-through rights to its patents. So, as an example, when we had in January of this year Kyocera joining a growing list of the CDMA manufacturers who have taken royalty-bearing agreements with Nokia, just as an example of how we have been put into a better position, something that we would not have been positioned to look into in the same way seven or eight years ago. When you then ask, how do we monetize all that, it's really through the OpEx that in our P&L the monetization of our IPR does flow. I think that's about it. We obviously expect that IPR, having increasing importance, will probably continue to increase in importance, but we are also working very hard to make sure that it's dealt with in a healthy way and actually with increased innovation, not make things tougher in terms of new players entering with their innovative potential in our industry. So if you look at our role on what it has been, it's been our role to underline a constructive approach in this industry. Bill Seymour: Next question, please.

Next question comes from Stuart Jeffrey with Lehman Brothers. Stuart Jeffrey - Lehman Brothers: Hi. Thank you. I have a question on networks. Your guidance is still for moderate growth for the full year, yet you had a very strong Q1. Your Q2 guidance also implies mid to high-teens growth year-on-year, so for the first half, 15%, 16%, 17% year-on-year. Is it all market share driven by Nokia? Are you expecting the market perhaps to slow down in the second half, or is the managed services businesses driving the first half? Perhaps you could detail your views between Nokia's market share and the underlying trends.

Stuart, this is Rick. Happy to try to do that. You asked a few things there. Is it driven by managed services, is it driven by what? It really is a combination of that, as you've seen, throughout the last year, quarter by quarter, and continuing here, U.S. managed services and services in general are becoming increasing percentage of Nokia Networks business, as it is in the industry, so it's definitely driving. We are going to approach probably some 40% of the revenues on the year could come from services overall. Not all of that is managed services, but services overall, and that's up from approximately 30% just a year ago. So good growth there, absolutely. But also in what, I guess you would say is the traditional part of the business, it's having reasonable growth. That's what accounted for then our call at the beginning of the year, to see slight to moderate growth. We upgraded that to moderate growth for the industry. We reiterated that here today. So no change there. In terms of quarter seasonality, I'm not putting any percentages on that, and in the infrastructure business, the point is, in fourth quarter to first quarter there is down seasonality, and we said that we would experience that. That has an impact on the markets. It looks like, some people would say, well, maybe there was less seasonality down. Well, maybe so. Then going from first quarter to second quarter tends to be up sequentially, but let's not put a percentage number on that, because averages in the infrastructure business, or going back by history, are a little bit dangerous because there's a little bit more volatility in the infrastructure business as they tend to be lumpier sales. You don't ship 75.1 million units in infrastructure like you do in handsets so you have a little more concentration. We said it earlier on the call. We said it in the press release. We reiterated our target to gain share, market share, in the Nokia Networks business in '06 in this basic industry dynamic that we're trying to paint here for you. Bill Seymour: Next question, please.

Your next question comes from Thomas Walkley with Piper Jaffray. Thomas Walkley - Piper Jaffray: Great. Thank you. If you the look at 3G, looks like you guys are continuing to separate yourselves from the competition over the past two quarters. I was wondering if you could potentially update us on your market forecast for '06 and give us some kind of idea of your sequential change in 3G units?

The 3G market really has been taking off, in the way that we have been discussing during the last four or five months. So if we look at the whole 2006, and put some propulsion into it, the market is likely to be about double of that in 2005. That will mean that it will approach 100 million units this year. Certainly the first quarter has given confidence to that forecast that we aired out I think for the first time in Barcelona in our communication. If you look at our own position, we feel good about the broadening of our product portfolio, so even if we have commented in this conference call quite a bit about N-70 and it's spectacular success, the truth is that we have a number of other products who have done really well and we expect particularly 6280 and a few other products really to come on stream in volume in second and third quarter and really make a mark. That will really mean that we can cover much more comfortably all the key price points from low, mid to high end, and that will be very important. Because in the future, what will happen is that people will not buy and operators in the distribution will not push 3G phones as such. They will be pushing phones that will be able to perform certain functions, functions as well as support certain services. So there needs to be an array of products which we now have. So we feel very, very good about having a strong share of that total, about 100 million, which we see being shipped. A lot of our success also is that our chipset and the cost advantage that we have in there gives us a lot of leverage in addressing the market through the different segments. So, yes, our investment is really paying off now, and when we go to higher bit rates and HSDPA and so on we expect that capability that we have built through the last three or four years in our R&D to continue to pay off. Bill Seymour: Next question, please.

Your next question comes from Jeffrey Schlesinger with UBS. Jeffrey Schlesinger - UBS: Thank you. Rick, can you give us some color on Europe and the 30% plus decline there relative to the 20% decline for market? What region did you see it in geographically more pronounced? Was it Western Europe? Eastern Europe? Where in the segment of your portfolio did you see the most share loss and what should our expectations be about stabilizing that share position in Europe? Thank you.

I think the question across Europe there, yes, we had a little drop-off there, by our numbers, but what you've got to look at is you've got to look a few things, you got to look at the sell out, and you've got to look at where the inventory channels are in Europe. GFK has us up in share, and I think that's the dynamic that we have a very clean channel, so we enter the second quarter in good shape. So kind of flattish. I don't think there's really more to say there in that sense. In some of the countries, the dynamics, you look at the data, look at the big countries. We've been having increasing success in France, in Italy, where this time last year we were actually a little bit less strong than we wanted to be. In the U.K. and Germany, those are very competitive, and we're going to have new product coming into those markets. So I feel good about where the channels are, and I feel good that as we look at second and third quarter that this won't be any big story, it will be a nice story for looking at our picture in western Europe. Bill Seymour: Next question, please.

Your next question comes from Paul Sagawa with Sanford Bernstein. Paul Sagawa - Sanford Bernstein: A couple things. First, I note that the inventory was up in the quarter which is unusual for the first quarter. I'm wondering if you can link it back to the different businesses and sort of explain it, essentially? Then the second thing is last year and in several other years, second quarter sales and marketing expenses have bounced up considerably relative to levels in the other quarters of the year. I'm wondering if since those spending is sort of under control if you can comment a little bit about your expectations for what marketing might be in this coming second quarter?

Paul, thanks for the two questions. On the inventories, first of all, there's nothing there. I'm struggling a bit to find logic in your comment that it's not typical for the first quarter, because it's not at all first, second, third quarter seasonality only. It's really very much a matter of how our product introductions are about to happen. So if you have a pipeline which is fuller than normal, as we have at this point of time, of new products to be launched, then you typically have inventory which is a little bit higher than it would otherwise be if there was an average amount of new product in the pipeline to be launched. So that's the explanation for the inventories. On the sales and marketing, I think, Paul, there really is one key point, which is the background point, first of all, and that is if you look at the effectiveness of our sales and marketing spend, we monitor that extremely closely. We know that if we spend $2.2 million in country X on three products, or if we do brand advertising in order to get brand recognition and preference up in a region, and do certain type of spending of $3.3 million, we know what to expect, we know how it has to be done, we monitor very closely is the outcome the same as our historical data would show. Therefore, if you look at the bang for the buck that Nokia gets from its advertising spend I think we are clearly ahead of the industry. Historical earnings on which we have built a database which is second to none, and, therefore, having marketing spend out of whack and out of control is beyond me. It's not happening. No way. So when we are looking at these variations between quarters it's, again, there's a plan, either you go with the product launches, and you want to push certain products into certain markets, or you have a certain goal in terms of brand related advertising which is a much more long term and you then allocate your funds in a certain way. To conclude what the second quarter sales and marketing is going to be, I think, obviously the conclusion would be that marketing spend is likely to be a little higher than it was in the first quarter because there are a lot of new products which are in their early stage of being launched, as we discussed in our presentation in this meeting. Our revenue in all likelihood is going to be higher through the volumes. So we go very much with the products and it's carefully planned. I think that's really the answer to that second question, Paul. Bill Seymour: Thank you. Two more questions, please, operator.

Your next question comes from Tim Boddy with Goldman Sachs. Tim Boddy - Goldman Sachs: Hi. Thanks very much. I'd just like to revisit Jeffrey's question about Europe. If you think about Europe as typically a region for Nokia with better than average ASPs, and better than average gross margin, it's quite extraordinary that you managed to improve your gross margin and ASPs sequentially despite Europe falling off in that way. It would be very helpful to understand how that happened, in terms of regions and so forth. Also, looking forward, presumably if you have confidence in Europe coming back that can tilt the tables in terms of ASP and gross margin development in a positive way. Thank you.

Two comments there. First of all, Europe didn't fall away. I mean, I think Rick's comment, which we started with, is extremely relevant. If you look at our sell in figures in Europe they were on the low side, but if you look at the sell-out, as represented by GFK or other market research, our share was flat sequentially. So leading into a very thin inventory levels in the channel. So Europe didn't fall. We held really well in Europe, and we have a good share there. That's the first comment. The second comment is, if you look at what's happening in other markets, markets other than Europe, Europe is not the whole world. Important, yes, but there are other very important markets. So if you look at the ASPs in other parts of the world, U.S., Latin America, China, particularly some new products in China, 1600, 6030, U.S. 6101, 6102. Latin America, 6101, and then the overall impact of N-70, which goes across the regions, the positive impact is then clear on the ASP. So this is a broad sweep of our success throughout our portfolio rather than looking at Europe falling off, which is not true, or some improvement in some really low ASP market, which is equally wrong as a generalization. So I think it's the overall strength of the performance through the good portfolio and good penetration in the markets which I would like to summarize as giving an explanation of what's happened in the quarter. Bill Seymour: Last question, please, operator.

Your last question will come from the line of Ittai Kidron with CIBC. Ittai Kidron - CIBC: Thank you, and first, Jorma, good luck in your new role. Rick, if you can comment a little about the market share progress in China, India, Russia and Southeast Asia? Clearly you're still number one over there, but I'm trying to tie that into your comment of the low-end markets not delivering as strong of a quarter as you expected. Can you give us a little bit more color on the market share progress in those markets and how would you expect that to shape up through the year?

Yes, I'm not going to get away from my perfect scenario comment, am I? I guess I made my bed. So we had very good volume there. Point is, we always want a bit more, but China, I think Jorma pointed out quite clearly the momentum continues there with 11 quarters of uninterrupted market share growth for us, and as importantly, I think, widening the gap to everybody else, and eight out of the top ten products are Nokia phones in China. If I recall, it seems that all of last year and this quarter it's either been eight, nine of the top ten have been Nokia phones, so that continues strong. So we feel good about both the results in Q1 and also how we're well set in China as we continue to push out the distribution, we continue to build the brand. Again, as Jorma mentioned, in terms of preference. When you look at APAC overall the momentum has continued. We have high market share in the region. Competition is tough, absolutely, but as I say, I think we performed well. So you need to look at APAC in total, not just India. Of course, India is disproportionate if you look in the region, but that's a good thing in terms of where we are with our brand there. Then the emerging market has just had huge market growth year-on-year, and we've kept our share even without those phantom incremental volumes that I said would exist in my perfect scenario, so I think it's a case of we continue to play well there. A number of people have woken up to what we were talking about and I think I said it at one of the conferences about 18 months ago, that it's interesting how people are waking up to the promise in the emerging markets in the low end, and we've seen that for some time. We've set our cost structure to meet that. We've set our brand strategy to meet that and we welcome others. I think we'll do okay.

Okay. Ladies and gentlemen, this concludes our conference call. I would like to remind you that during conference today we made a number of forward-looking statements that involved risks and uncertainties. Actual results may therefore differ materially from the results currently expected. Factors that could cause those 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 our press release issued today. Thank you, and have a nice day.

Thank you for participating in Nokia's 2006 first quarter earnings conference call. You may now disconnect.