Nokia posts first quarter loss of €272 million3 min read . Updated: 18 Apr 2013, 04:57 PM IST
Sales of Lumia smartphones rose to 5.6 million units from 4.4 million in the fourth quarter
Stockholm: Nokia Oyj, the Finnish mobile-phone maker seeking a comeback, reported its smallest quarterly revenue in 13 years as handset demand waned, missing analysts’ estimates and sending its stock down as much as 13%.
First-quarter sales fell 20% to €5.85 billion ($7.6 billion), Espoo, Finland-based Nokia said on Thursday. Analysts projected €6.52 billion, the average of estimates compiled by Bloomberg. Mobile-phone volumes slumped 25%.
Competition from Asian manufacturers building phones that run Google Inc.’s Android software is hurting demand for Nokia’s basic handsets. The sales miss puts chief executive officer Stephen Elop’s recovery effort at doubt, as nascent demand for the company’s Lumia smartphones isn’t enough to offset plummeting demand for Nokia’s older models.
“The lower-end mobile phone business is not doing well," Mikko Ervasti, an analyst at Evli Bank Oyj in Helsinki, said in a phone interview. “They need to start pushing their Microsoft-based Lumias into cheaper prices to gain traction in emerging markets."
Nokia fell as low as €2.30 and lost 9.4% to €2.39 at 2.02pm in Helsinki. The stock tumbled 22% last year, its fifth straight annual drop, and has lost 10% this year through yesterday.
The revenue was the smallest since the third quarter of 1999, when Nokia was still a more diverse company with business lines including computer monitors.
Sales of the flagship Lumias running Microsoft Corp.’s Windows software rose to 5.6 million units from 4.4 million in the fourth quarter as Nokia added versions. Apple Inc. and Samsung Electronics Co.’s quarterly smartphone sales exceed 100 million units combined.
Nokia sold a total of 61.9 million mobile devices during the three months. Analysts on average predicted 73 million units, including 5.7 million Lumias.
“People are responding positively to the Lumia portfolio," Elop said in the statement. “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."
Revenue at Nokia’s handset business slumped 32% to €2.89 billion. Operating profit at the unit, excluding some items, was 0.1% of sales. The company had predicted a margin of between negative 6% and positive 2%.
This quarter, that margin will be negative 2%, plus or minus 4 percentage points, Nokia predicted. Evli’s Ervasti predicts a margin of 0.7%.
To reduce costs, Elop has cut more than 20,000 jobs and closed production and research sites since taking over in 2010. For the last three months of 2012, the company posted its first profit in seven quarters.
The first-quarter net loss narrowed to €272 million, or 7 cents a share, from €928 million, 25 cents, a year earlier.
Nokia’s net cash increased to €4.5 billion from €4.4 billion at the end of December. Nokia’s debt is at junk status with the three main rating companies. In January, Nokia scrapped its dividend for the first time in at least 143 years to bolster its liquidity position.
Once the world’s largest smartphone maker, Nokia had more than 50% of the market before Apple’s iPhone and Google’s Android were introduced about six years ago. Nokia has lost about 90% of its market value since then and fallen outside the top-five smartphone makers.
In the last three months of 2012, Cupertino, California-based Apple sold 47.8 million iPhones and South Korea’s Samsung, the biggest maker of Android devices, sold 62 million smartphones.
Elop, who joined from Microsoft, started betting on his former employer’s operating system after Nokia’s homegrown Symbian software fell out of favour among consumers. BLOOMBERG
Kasper Viita in Helsinki contributed to this story.