Nokia Sell 4M Lumias (But Where’s The Profit?)

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Lumia ahead for Nokia’s smartphone ambitions as it enjoys record sales – as losses quadruple.

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However, during Q2 April-June period Nokia’s net sales of ‘smart’ devices fell 10% (-34% y-o-y), although it sold 4 million Lumia devices.

Nokia attributed the decline to lower Symbian volumes, which was only partially offset by higher volumes of Nokia Lumia smartphones.

This marks the highest jump for Nokia Lumia sales, its first major line of smarties released in November 2011 and since then has launched Lumia 800 and 900 to over 50 countries.

Noki devices also enjoyed growth in US (+38%) but fell in its native Europe (-19%), China (6%) and flat 0% growth in the Asia Pacific.

In the US in particular sales “exceeded expectations” and the Lumia range was among the top selling smartphones on Amazon.

Nokia, who famously ditched its in-house Symbian platform for Microsoft Windows Phone last year, received a welcome quarterly “platform support payment” of US$250 million from Microsoft, handy as it battles losses from dead Symbian OS.

In June, the number of applications in the Windows Phone Marketplace surpassed 100 000 – up from 50 000 at the start of 2012 – but still has a long way to catch up to Apple and Google’s hundreds of thousands of apps, a major attraction for consumers.

In its stronghold, mobile phone division net sales fell on a year-on-year and quarterly basis, due to lower Average Selling Prices, Nokia confirmed.

Overall, Nokia’s net sales in Q2 2012 were EUR 7.5 bn (A$8.8bn), up from EUR 7.4 bn in Q1 2012.

However, it wasnt all good news for Finnish phone giant recording a EUR 1 410 million loss (A$1660m based on current conversion rates) – quadruple the amount recorded in Q1 (EUR 368 million) attributable to equity holders of the parent and a loss of EUR 119 million attributable to “non-controlling interests.”

Nokia still sells massive volumes of “dumb” phones in developing countries in Latin America, Africa and has high hopes for Microsoft’s Windows 8 platform due on October 26tth .

“We believe the Windows Phone 8 launch will be an important catalyst for Lumia,” CEO Stephen Elop said today.

 

Q3 expected to be a “challenging” quarter in ‘Smart Devices’ due to product transitions, Nokia said in a statement today, but said it is “taking action to manage through this transition period.”

“While Q2 was a difficult quarter, Nokia employees are demonstrating their determination to strengthen our competitiveness, improve our operating model,” Elop said, in an attempt to quell investor fears.

Earlier this year the struggling company laid off thousands of staff in an attempt to halt the losses it suffered as rivals like Apple and Samsung got ahead in the smartphone race. The planned closure of its Nokia factory in its native Finland is also proceeding “in a collaborative spirit,” Elop said.

Nokia expects a difficult Q3 and predicts a -9.1%, (plus or minus 4%) operating margin in its Devices & Services division which it is blaming on “competitive industry dynamics” based on consumers demand for its Lumia range and the rough macroeconomic environment.

Its Location & Commerce business with auto-industry customers continued to grow, and Nokia says it has made good progress establishing the platform with businesses like Yahoo!, Flickr, and Bing.

It is also planning to provide updates to current Lumia products over time, well beyond the launch of Windows Phone 8, he added.

The phone maker is also on the innovation trail and filed more patents in the first half of 2012 since ’07.

“While Q3 will remain difficult, it is a critical priority to return our Devices & Services business to positive operating cash flow as quickly as possible,” Elop said.

Nokia ended Q2 with gross cash of EUR 9.4 billion and net cash of EUR 4.2 billion. 

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