Nokia Lumia Shipments Rise to Record Levels, Company Posts $196 million Loss
4/18/2013 by: Denis Jelec
Nokia Corp. (NYSE:NOK) posted their Q1 2013 results, and there are no major surprises: they reported a $196 million operating loss with $7.65 billion in revenue (missing analyst expectations of $8.65 billion). This loss was predicted by the company, ever since they briefly turned to profitability in the Q4 2012. Devices & Services net sales decreased 25% quarter-on-quarter and mobile phone volumes decreased 30% in the same period, “reflecting competitive industry dynamics and an estimated higher than normal seasonal decline in the market addressable by Mobile Phones.”
Impact this minor loss had was somewhat dwindled by the Nokia Siemens Networks, which again turned last year’s $1.31 billion loss into $3.92 million profit. To further remove the possible doom and gloom layer, it is enough to compare this result with Q1 2012, when Nokia posted an operating loss of approx. $1.75 billion. Smart Devices segment again went down quarter-over-quarter from 86.3 million sold units to 61.9 million sold units, as Nokia is dropping Symbian completely. Due to this, the average selling price of the smartphone units went upwards from 243$ to 249$, as Lumia lineup has a higher margin.
Shipments of the Lumia phones went up from last quarter as well, from 4.4 million to the record amount of 5.6 million units, as Nokia expanded the portfolio significantly into lower segments of the market with models 520 and 620, creating an increased momentum for the company. However, all regions except the North America went up in Lumia shipments, while Symbian sales continued to plummet. To address this in a way, Nokia CEO Stephen Elop gave a hint during the earnings call with investors on upcoming device range: “later this quarter a new Lumia device is anticipated to have hero status with a leading US carrier.”
Stephen Elop also provided some comments on these results: “At the highest level, we are pleased that Nokia Group achieved underlying operating profitability for the third quarter in a row. While operating in a highly competitive environment, Nokia is executing our strategy with urgency and managing our costs very well.
We have areas where we are making progress, and areas where we are further increasing the focus. For example, people are responding positively to the Lumia portfolio, and our volumes are increasing quarter over quarter. Nokia Siemens Networks delivered another strong quarter and contributed to an overall improvement in Nokia Group’s cash position. On the other hand, our Mobile Phones business faces a difficult competitive environment, and we are taking tactical actions and bringing new innovation to market to address our challenges.
All of these efforts are aimed at improving our financial performance and delivering more value to our shareholders.”
What Nokia expects in Q2 2013 is its “Devices & Services non-IFRS operating margin to be approximately negative 2 percent, plus or minus four percentage points,” with support coming in the form of wider availability of the recently announced Lumia products. Growth here is expected to be even higher than what happened in between Q4 2012 and Q1 2013, but numerous challenges remain as competition grows with each passing day. More information is available in the official report (.pdf format).
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