Nokia reports “difficult” Q3 as sales plummet – Mobile World Live

Nokia reports “difficult” Q3 as sales plummet

18 OCT 2012

Nokia reported a continued weak performance for its devices business, with Stephen Elop, the company’s CEO (pictured), describing its third quarter as “difficult”. However, the Nokia Siemens Networks (NSN) joint venture provided something of a positive, with the executive describing this unit’s performance during the period as “remarkable”.

During the period, Nokia shipped 82.9 million handsets in total, down 22 percent year-on-year from 106.6 million. It saw volumes decreasing in both its Smart Devices unit and its mass-market Mobile Phones unit.

On a group level, it announced a net loss for the quarter of EUR943 million, compared with an EUR151 million loss in Q3 2011, on revenue of EUR7.24 billion, down 19 percent from EUR8.98 billion.

The Devices & Services unit saw an operating loss of EUR683 million, compared with a prior-year profit of EUR168 million, on sales of EUR3.56 billion, down 34 percent from EUR5.39 billion.

Within this, Smart Devices volumes fell by 63 percent year-on-year to 6.3 million units from 16.8 million, with revenue falling by 56 percent to EUR976 million from EUR2.19 billion.

Less than half of those units – 2.9 million, or 46 percent – were from its Windows Phone-powered Lumia range. As had previously been suggested, the company noted that it had seen “lower operator and distributor demand for Lumia” in North America, as it prepares to launch its first smartphones powered by Windows Phone 8. It also noted “lower volumes of our Symbian and Lumia products” in Europe from the prior quarter.

And in its mass-market Mobile Phones unit, volumes fell by 15 percent year-on-year to 76.6 million from 89.8 million units, with sales down 19 percent to EUR2.37 billion from EUR2.92 billion. Its average selling price fell year-on-year due to increased volumes of lower-priced devices, although it has stabilised quarter-on-quarter, following the launch of its full-touch Asha devices (which are now being referred to as “smartphones”).

Contrastingly, Nokia Siemens Networks saw an operating profit of EUR182 million, compared with a prior-year loss of EUR114 million, on net sales which increased by 3 percent to EUR3.5 billion from EUR3.41 billion.

It was said that this was due to “higher sales of infrastructure equipment and slightly higher sales of services, partially offset by a decline in sales of business areas not consistent with Nokia Siemens Networks’ strategic focus”. Growth for NSN in APAC, and particularly Japan, was partially offset by lower sales in Europe.

From the prior sequential quarter, net cash and other liquid assets decreased by EUR633 million, primarily due to “cash outflows related to restructuring, cash outflows related to net financial expense, Devices & Services operating losses as well as capital expenditure”.

This was partially offset by positive operating profits at NSN, and the receipt of approximately EUR202 million in “platform support payments” from Microsoft.

The company’s outlook for the fourth quarter is fairly bleak, with its Devices & Services operating margin expected to be “approximately negative 6 percent, plus or minus 4 percentage points”. It noted that competitive industry dynamics are continuing to negatively affect both its Smart Devices and Mobile Phones unit, and increased expenses in Devices & Services related to new launches, partially offset by cost reductions.

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Steve Costello

Steve works across all of Mobile World Live’s channels and played a lead role in the launch and ongoing success of our apps and devices services. He has been a journalist...More

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