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Nokia has announced that its second-quarter earnings plummeted by 66%.  The company blames the recession for the drop, saying demand for its products has diminished due to the economic turmoil.  Their net profit was $535 million down from roughly €1.4 billion this time last year.  Nokia shares fell 11% as a result of the news.

The company shipped 103 mobile devices this quarter, down 15% from a year ago and prices on their handsets fell to US $88 from US $104 last year.  Their North American distribution fell 30%.  Facing strong rivals in Apple and RIM, the company says it is trying to transform itself:

Nokia CEO Olli-Pekka Kallasvuo said the company performed well in a ‘‘tough quarter’’ and that demand appeared to be bottoming out after falling sharply in recent quarters. He said Nokia is accelerating its transformation into a ‘‘solutions company’’ that offers not only cell phones, but services and applications as the handset, Internet and media industries converge.

‘‘The mobile industry is undergoing its biggest change in its 20-year history,’’ Kallasvuo told analysts in a conference call.

To that end, Nokia has launched the Ovi Store, its answer to Apple’s popular App Store.  Customers can find ringtones, games, applications and other content there for their Nokia phones.  Analysts say if Nokia is to succeed they must develop strong relationships with top U.S. network operators and catch on quicker to hot trends like touchscreens and clamshell designs.

Read [NYTimes]