Nokia's Q1 Financials: $1.76 Billion Operating Loss, Sales Down 40% With 11.9 Million Smartphones Sold

Nokias Q1 Financials: $1.
76 billion
operating loss, sales down 40% with 11.9
million smartphones sold
19th April 2012 by Matt Brian

Nokia has published its first quarter financial results for 2012, displaying a 1.34 billion Euro
($1.76 billion) operating loss, as net sales of mobile devices declined by 40% year-on-year,
with smartphones taking a 51% hit over the past 12 months.
In its last quarter, Nokias net sales hit 7.35 billion ($9.65 billion) which was down 26% on
its last quarter, with 11.9m smartphones and 82.7 million mobile devices sold. This was bad
news for the company, as smartphone and mobile device sales dropped by 39% and 27%
respectively from the previous quarter.
Year-on-year, net sales in China fell 70%, in Europe by 35% and sales in North America
were down 34%. In the Middle East and Africa they dropped 32% and in the APAC regions,
Nokia saw a 28% decline. This also meant that the company saw a 40% drop in net device
sales.
The company had warned investors of lower-than-expected earnings in Q1, releasing an
amended outlook for the key Devices & Services business unit, despite selling over 2 million
Lumia phones in the first quarter of the year.
It said multiple factors negatively affected the unit to a greater extent than it previously
expected. In particular, Nokia blamed declines in gross margins and competitive industry
dynamics (which means Apple and Android handset makers are continuing to making the
companys life difficult).
In todays release, Nokia puts its losses down to greater than expected competitive
challenges and seasonality with reported losses also primarily driven by charges related to
restructuring activities.
Nokia CEO Stephen Elop commented on his companys recent quarter, painting a grim story:
We are navigating through a significant company transition in an industry environment that
continues to evolve and shift quickly. Over the last year we have made progress on our new
strategy, but we have faced greater than expected competitive challenges.
We have launched four Lumia devices ahead of schedule to encouraging awards and popular
acclaim. The actual sales results have been mixed. We exceeded expectations in markets
including the United States, but establishing momentum in certain markets including the UK
has been more challenging.
Its interesting to see that Elop points out that it has been difficult to establish momentum in
the UK, especially given the fact that the company had originally focused the launch of its
new Lumia 800 smartphone and subsequent Lumia 710 and Lumia 610 launches.
With 2 million smartphones sold, its still a massive way behind Apple and Samsung, after
Apple reported nearly 20 times that figure in its last quarter (although it will be releasing
updated sales figures next week).
Elop continues:
At the same time, the lower price tiers of our industry are undergoing a structural change, and
traditional feature phones are challenged by full touch devices. As a result we are taking
deliberate measures to continue to renew our Series 40 platform, and we plan to strengthen
our line-up in Q2 2012. We are making investments in our Mobile Phones business unit
aimed at addressing the gaps in our offering.
We have a clear sense of urgency to move our strategy forward even faster. We are pursuing
step function changes by having launched the Lumia 610 and Lumia 900 in the first quarter,
expanding market coverage, increasing advertising, introducing key customer-requested
features and broadening our most successful go-to-market activities. At the same time, we
have focused our efforts in the low-end of smartphones and feature phone asset to drive
improved business results and conserve cash.
We are confident in our strategy and focused on responding urgently in the short term and
creating value for our shareholders in the long term.
Nokia says that the expansion of its Lumia portfolio to cover higher and lower price points,
increasing its geographic reach to 45 countries and the launch of the Lumia 900 in April have
been encouraging signs for the company.
Nokia also collected another 250 million Euro payment from Microsoft, but it hasnt affected
its overall performance as the company stares down the barrel following another dismal
quarterly earnings report

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