Windows phones temper Nokia loss in fourth quarter

AP, Helsinki

Sat, Jan 28, 2012 - Page 5

Mobile phone maker Nokia Oyj on Thursday reported a fourth-quarter net loss of 1.07 billion euros (US$1.38 billion) as sales slumped 21 percent even as the company’s first smartphones running Microsoft Corp’s Windows hit markets in Europe and Asia.

The loss, widened by a 1 billion euro loss booked on Nokia’s navigation systems unit, compares with a profit of 745 million euros in the same period a year earlier.

Nokia said net revenue — including both its mobile phones and its network divisions — fell from 12.6 billion euros in the fourth quarter of 2010 to 10 billion euros, with smartphone sales plunging 23 percent.

Nokia has lost its once-dominant position in the global cellphone market, with phones running Google Inc’s Android and Apple Inc’s iPhones overtaking it in the growing smartphone segment.

The Finnish company is attempting a comeback with smartphones using Windows software, a struggle that Nokia CEO Stephen Elop characterized as a “war of ecosystems.”

Elop said Nokia has sold “well over” 1 million such devices since the launch of the Lumia line in the fourth quarter, in line with expectations.

Including other models, Nokia sold 19.6 million smartphones in the quarter, down from 28 million a year earlier. By comparison, Apple sold 37 million iPhones.

The Lumia 800 and Lumia 710 hit stores in Europe and Asia in November, while T-Mobile started offering the 710 in the US this month. Nokia hopes to boost its poor presence in the US with the higher-end Lumia 900, which AT&T will offer later this year.

Elop said Nokia would be shipping Lumia phones to Canada next month and China and South America during the first half of this year.

“With Lumia, our specific intent has been to establish a beachhead in this war of ecosystems and country by country that is what we are now accomplishing,” Elop said in a conference call.

Nokia shares closed up 2.7 percent at 4.16 euros on the Helsinki Stock Exchange.

Michael Schroeder, analyst at FIM bank in Helsinki, said markets had welcomed Elop’s comments on Lumia sales.

“It definitely alleviated concerns about a horror scenario, expected by some. Although a million is not a lot in the market, it was better than expected,” Schroeder said.

The company said it would not provide annual targets for this year since it was in a “year of transition,” but added that it expected operating margins in the first quarter of this year to be “about break-even, ranging either above or below by approximately 2 percentage points.”

It repeated the target of cutting costs by more than 1 billion euros by next year.

Neil Mawston from Strategy Analytics in London said Nokia “was not out of the woods yet,” but its quarterly result was in line with expectations.

“Nokia is not necessarily dead in the water. Profit margins were a bit higher than expected and Nokia has not lost its third position in smartphones, although it is suffering in North America and western Europe,” Mawston said.