Thursday, October 18, 2012

Third quarter results for Nokia. RIM take note.

This is what happens when you make a good phone, but its too bulky and heavy. Has to be mobile! Better luck to the former number one manufacturer.

The former world number one mobile maker Nokia has announced its Q3 financial results today, reporting yet another quarterly loss — posting an operating loss of €576 million ($754 million). Net sales for the quarter were €7.239 billion ($9.49 billion).

Nokia said sales of its Lumia line of Windows Phone 7-based smartphones decreased quarter-on-quarter to 2.9 million units (down from four million in the previous quarter) — attributing this decline to the looming launch of Windows Phone 8-based devices, due next month.

Total smartphone sales were 6.3 million (down from 10.2 million in the previous quarter). While sales of mobile phones totalled 76.6 million during the quarter, of which 6.5 million were its Asha full touch phones.

The company also noted shrinking cash reserves. Nokia’s net cash fell to €3.6 billion ($4.7 billion) by the end of the quarter, down from €4.2 billion in June.

Commenting on the results, Nokia CEO Stephen Elop said in a statement:
As we expected, Q3 was a difficult quarter in our Devices & Services business; however, we are pleased that we shifted Nokia Group to operating profitability on a non-IFRS basis.

In Q3, we continued to manage through a tough transitional quarter for our smart devices business as we shared the exciting innovation ahead with our new line of Lumia products.
In our mobile phones business, the positive consumer response to our new Asha full touch smartphones translated into strong sales. And in Q3, our mobile phones business delivered a solid quarter with sequential sales growth and improved contribution margin.

In Location & Commerce, we made progress establishing our platform offering with customers like Amazon. This is in line with our plan to expand our location offering to more customers.

And, Nokia Siemens Networks had a remarkable quarter in which we achieved record profitability on a non-IFRS basis and the Nokia Siemens Networks cash balance increased for the fourth quarter in a row.

While we continue to focus on transitioning Nokia, we are determined to carefully manage our financial resources, improve our competitiveness, return our Devices & Services business to positive operating cash flow as quickly as possible, and ultimately provide more value to our shareholders.

Nokia said it expects the fourth quarter to be “challenging”, despite being able to start selling WP8-based Lumias in Q4 — “with a lower-than-normal benefit from seasonality in volumes, primarily due to product transitions and our ramp up plan for our new devices”.

It said it expects its non-IFRS Devices & Services operating margin in Q4 to be approximately negative 6 percent, plus or minus four percentage points.
Commenting on the results, IHS Screen Digest analyst Ian Fogg noted that the WP8 launch timetable will continue to cause Nokia pain in Q4.

“Given the November Windows Phone 8 availability, Nokia’s smartphone results will not see much uplift in 2012. Q4 results will be v tough,” he tweeted.
Fogg also noted how the results highlight Nokia’s failure to drive Windows Phone into the North American market — with just 300,000 handsets shipped in Q3.

While Nokia’s -64 percent year-on-year decline in China — attributed by Nokia to its move away from Symbian — is also equally down to “lack of take up of Windows Phone Lumia devices”, said Fogg.

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