Nokia: Smarts Up, Dumbs’ Down

Nokia back in the smart race as Lumia soars 30% but dumb phones slide.
Nokia sold 5.6 million Lumia Windows smartphones last quarter according to its latest financials for Q1, which reflects “increasing momentum” for its tile based phones.

The Lumia range which run Microsoft Windows 8 platform was a big gamble for the Finnish giant who ditched its own Symbian OS and suffered deep losses in the face of competition from Apple and Samsung, who got ahead in the smartphone race.

However, sales of Nokia stable ‘dumb’ mobiles fell 30% to 55.8 m, due to a “higher than normal seasonal decline” as smartphone popularity outweighs basic devices.

Has Lumia put Nokia back in the smartphone race?

“People are responding positively to the Lumia portfolio, and our
volumes are increasing quarter over quarter”said Stephen Elop, Nokia
CEO.

“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.”

But even rising smartphone sales wasn’t enough to save the Fins – who posted an operating loss of EUR 150m – however, it was an improvement on the EUR 1.3bn figure posed the same first quarter 2012.

Sales in Nokia Devices division fell 25% quarter-on-quarter to EUR 2.9 billion but said it achieved underlying profitability for the second quarter in a row, with an operating margin of just 0.1%.

Nokia overall net sales in Q1 2013 were EUR 5.9 billion – a 20% drop compared to a year ago.

However, Nokia is still the No. 2 phone maker behind Samsung and accounted for almost one in five phones sold last year, according to analysts Gartner.

Nokia Siemens Networks also enjoyed 7% operating margin which lifted the Group’s cash kitty by EUR120m to EUR4.5bn.

“We are pleased that Nokia Group achieved underlying operating profitability for the third quarter in a row,” Elop said, adding,

“While operating in a highly competitive environment, Nokia is executing our strategy with urgency and managing our costs very well. 

Elop also hinted Nokia cost cutting drive may go further, saying there are ” areas where we are further increasing the focus.”

Nokia Group reported earnings per share of EUR -0.07.