Nokia makes Q4 loss of almost €1bn

Nokia makes Q4 loss of almost €1bn

Nokia made a loss of 954m in its recent financial quarter, with sales also down 21%.

For the quarter ending 31 December 2011, net sales were 10bn, down 21% on the same period last year. Its losses were stark as it made a 884m profit in its fourth quarter in 2010.

The company's mobile phone sales were worth 6bn during the quarter, down 29% on last year. Smartphone sales were down 38% to 2.75bn and mobile phone sales were down 23% to 3.04bn. Volume sales were also down but not as starkly. The manufacturer sold 113.5 million units during the quarter, down 8% on 2010. However, smartphones sales plummeted the most, down 31% to 19.6 million units. Its devices and service unit, which includes the mobile phone business, made an operating profit of 203m, down 81% on last year.

Noka's CEO Stephen Elop said the fourth quarter marked a 'significant step' in Nokia's transformation. He said the manufacturer has sold more than one million Nokia Lumia devices to date. He said: 'while we progressed in the right direction in 2011, we still have a tremendous amount to accomplish in 2012, and thus, it is my assessment that we are in the heart of our transition. Specifically, changing market conditions are putting increased pressure on Symbian.

'In certain markets, there has been an acceleration of the anticipated trend towards lower-priced smartphones with specifications that are different from Symbian’s traditional strengths. As a result of the changing market conditions, combined with our increased focus on Lumia, we now believe that we will sell fewer Symbian devices than we previously anticipated.'

He added: 'In summary, with a strong balance sheet, our performance in mobile phones and the new excitement around Lumia, we are confident that we are on the right track to build long-term value.'

The company predicted its operating margin for the devices and services sector would break even because of competitiveness among smartphones, a 'greater than normal' decline in net sales, the wider economy and demand surrounding its new products.

In Europe, device and services net sales were €1.92bn, down 38% on 2010. The continent is still Nokia's largest market by value. However, Asia-Pacific is its largest by volume with 34.7m devices sold during the last quarter, up 11% on 2010. In Europe volume sales were 25.3m, down 24% on its previous year.

For the full 2011 financial year, Nokia made a loss of 1.07bn, down significantly from the 2.07bn operating profit it reported in 2010. Sales were 38.7bn, down 9% on 2010. Its devices and services segment also performed poorly during the full year. Net sales were down 18% to 23.9bn, with operating profit down 75% to 884m. Similar to its Q4 performance, smartphone net sales were down the sharpest in value and volume terms. It sold 77.3 million smartphones, down 25% on 2010, with sales worth 10.8bn, down 27% on its previous year.

IDC analyst Francisco Jeronimo said the transition from Symbian to the new Windows Phone OS had been 'painful' but the results showed the move had to be quicker. However, he said the Nokia Windows Phones had made a good start, citing IDC research that claimed sales of HTC and Samsung Windows Phones have been 'significantly affected' since the launch of the Lumia series.

He added: 'Nokia's outlook for the upcoming two quarters is still gloomy. The Windows Phones volumes will not be enough to offset the decline of Symbian and the company needs to improve the internal structure by cutting costs to remain profitable. In most European countries, Nokia reduced its workforce significantly with cuts of over 50%.'

David McQueen, principal analyst at Informa, said Nokia would have been 'disappointed' with the Lumia sales figures, given 'the impressive demand experienced during the first days of launch back in October'. He said: 'The company needs to extend the Lumia range across price tiers and move quickly to other mobile operators and markets if it is to achieve critical mass for the devices, notably breaking China, as its smartphone volumes are clearly reliant on Lumia to start plugging the gap left by declining Symbian sales.'

Nokia also announced its chairman Jorma Ollila will step down after its forthcoming annual general meeting in May.

Written by Mobile Today
Mobile Today


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