Nokia posts €954m loss in Q4

Nokia has announced a staggering operating loss of €954m ($1.25bn) in 4Q11. The Finnish firm recorded an operating profit of €884m in the same period last year, and a -€71m loss in the third quarter of 2011.

Meanwhile, revenues for the quarter dropped year-on-year from €12.6m in 4Q10 to €10m.

The firm said that, despite its poor performance, it could take heart from the fact that it has sold over one million Lumia smartphones to date, and is accelerating investment in the range. The Lumia range of handsets are the first devices that Nokia has brought out in partnership with Microsoft, which run on the Microsoft Windows mobile operating system.

“Overall, we are pleased with the performance of our mobile phones business,” said Nokia CEO Stephen Elop.

“Just six months after signing an agreement with Microsoft, we introduced our first two devices based on the Windows Phones platform – the Nokia Lumia 800 and the Nokia Lumia 710. We brought the new devices to market ahead of schedule, demonstrating that we are changing the clock speed of Nokia.”

However, he added that the firm still has a lot of work to do in the year ahead and argued that the firm is in the midst of transition, with its phones running on the Symbian platform suffering.

“Specifically, changing market conditions are putting increased pressure on Symbian. In certain markets, there has been an acceleration of the anticipated trend towards lower-priced smartphones with specifications that are different from Symbian’s traditional strengths. As a result of the changing market conditions, combined with our increased focus on Lumia, we now believe that we will sell fewer Symbian devices than we previously anticipated.”

However, David McQueen, principal analyst at Informa Telecoms & Media, was more critical of Nokia’s results, describing it as some of the firm’s  worst results ever for a final quarter.

“Whilst total volume shipments were down 8 per cent year-on-year, probably in line with expectations, surprisingly smart devices volume sales was down a massive 31 per cent; and this during a quarter when it launched its eagerly awaited Microsoft Windows Lumia smartphones,” he said.

Although the company has stated that it sold “well over 1 million” Lumia devices, McQueen believes this would have disappointed, bearing in mind the impressive demand experienced during the first days of launch back in October.

“This early promise obviously never really materialised for the remainder of the quarter, which is a key time of year for all handset vendors. In tandem, the company’s Symbian smartphone sales are suffering as the trend towards lower-priced smartphones on the Android platform is taking hold and quickly eroding Symbian volume. Nokia must hope that its price-competitive Asha range of S40 devices can help stem some of this tide in a number of markets owing to their having a selection of on-board apps, giving some element of ‘smartness’.”

He noted, however, that the company can claim limited success in its mobile phone business, notably dual SIM handsets in emerging markets.

“Nokia still leads the market in terms of volume in the non-smart segment, with a solid array of available handsets, but it is quite clear that margin and profit are becoming key indicators in the market rather than purely volume, which is ripe for attack by the growing strength of the cost-conscious Chinese vendors.”