Nokia makes loss as smartphone sales drop by a third

The planned move to Windows Phone has hit sales of Nokia's current smartphone range

Nokia made a net loss in the second quarter following a dramatic decline in smartphone sales, it reported Thursday.

The company reported net sales of €9.275 billion ($US13.35 billion), down 7 per cent on a year earlier, but sales of smartphones plunged 32 per cent in value (and 34 per cent in volume) to €2.37 billion. Nokia reported an overall operating loss of €487 million, compared to an operating profit of €295 million a year earlier, and a loss per share of €0.10 ($US0.15), compared to earnings per share of €0.06 a year earlier.

Sales of Nokia's smartphones have been slowing since it announced on February 11 that it will use Microsoft's Windows Phone as the OS for its future smartphones, signalling that the Symbian OS used in its current devices will become a technological dead end. The average selling price of Nokia's smartphones fell by 3 percent compared to the previous quarter, as Nokia cut prices to attract customers. Sales of Nokia's less-sophisticated mobile phones fell 20 per cent to €2.55 billion, with a similar decline in volume.

Results were buoyed by an increase in sales at the company's network infrastructure joint venture, Nokia Siemens Networks. Nokia's share of sales rose 20 per cent to €3.64 billion, while operating loss dropped to €111 million, from €179 million a year earlier.

Analysts had forecast revenue of around $13 billion, and earnings per share of around $0.03. Two months ago, analysts were more optimistic about Nokia's profitability, predicting earnings per share of $0.14, but on May 31 Nokia revised its financial outlook, forecasting device sales "substantially below" its previously expected range.

Nokia forecasts that its operating margin on phone sales will be "slightly above breakeven" in the third quarter.

Nokia's stock price on the Helsinki stock exchange rebounded slightly on news of the results. It has fallen by half since February, dropping sharply the day Nokia announced its new smartphone strategy, rallying only slightly with the announcement of the company's first-quarter results and second-quarter outlook on April 21, and plunging again when Nokia revised its financial outlook on May 31.

Nokia could go from being the leading smartphone vendor to number three in just one quarter, Gartner analyst Carolina Milanesi warned via Twitter.

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Peter Sayer

IDG News Service
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