Nokia has revealed a 13% fall in year on year sales in its third quarter results, despite increasing the volume of mobile phones it shipped.
The Finnish giant reported net sales amounting to €8.9bn (£7.8bn) – down from €10.2bn (£8.9bn) in the same quarter last year.
The fall in sales resulted in operating profit plummeting from €403m (£352.9m) to a loss of €71m (-£62.2m). However, the company did see net cash from operating activities climb 94% to €852m (£746.1m) signaling signs of recovery as the company prepares to unveil its first joint handset with Microsoft next week.
Nokia CEO Stephen Elop (pictured) said: ‘I am encouraged by the progress we made during Q3, while noting that there are still many important steps ahead in our journey of transformation. With each step, you will see us methodically implement our strategy, pursuing steady improvement through a period that has known transition risks, while also dealing with the various unexpected ups and downs that typify the dynamic nature of our industry.’
The company’s device and services division saw sales fall by 25% overall with only the Middle East and Africa showing growth. The company said that on a year on year basis, the decline in volumes in the third quarter 2011 was driven by lower smart devices volumes, which more than offset the increase in its mobile phones volumes, up 8% on last year.
Sales for the mobile phones unit were still down by 14% on last year’s results despite the increase in demand from emerging economies.
Elop commented: ‘Our results in Q3 indicate that our sales execution and channel inventory situation have improved. From a product standpoint, our overall mobile phones portfolio performed well. We shipped approximately 18 million dual Sim devices in Q3, and in markets such as India, where dual Sim is pervasive, we gained market share. We also strengthened our smart devices line up in Q3, with the launch of our first smartphones running Symbian Belle, which improves the user experience and strengthens the competitiveness of our product portfolio'.
Francisco Jeronimo, research manager, European mobile devices at analyst IDC, said: ‘Nokia's results announced today show how painful the transition has been from Symbian to Windows Phones. Despite the investment on making Symbian more attractive, the new versions of Symbian Anna and Symbian Belle are not helping Nokia in any way.
‘Consumers and mobile operators are looking forward to seeing the new Windows Phones. For most mobile operators in Europe it is completely pointless to support a "ghost" operating system. They want Windows Phones and that is what Nokia needs to deliver next week at Nokia World in London.
‘Failing to deliver the Windows Phones this year puts Nokia in a very dangerous position on the market. Nokia's smartphone market share is expected to decline this quarter to 15% from 17% in Q3 2010. Nokia's worldwide market share is expected to be around 29%, down from 32% in Q3 2010.’
Last month, Nokia announced that it had appointed three new UK distribution partners following a six months strategic review and it has refreshed its care centres in anticipation of its renewed assault on the UK smartphone market.
The company will unveil a new youth-focused brand image and a £20m marketing campaign at Nokia World in London next week as it presents its first Microsoft-based handset under the company’s strategic partnership unveiled in February.