Nokia posts huge 2Q loss

The decline of the once largest handset manufacturer in the world, Nokia, is showing little sign of abating as the firm posted a net loss of €1.41bn in the second quarter quarter of 2012. The loss is almost four times as much as that made by the Finnish firm in the same quarter a year earlier (€368m loss). The firm also saw a 19 per cent year-on-year drop in net sales, down to €7.54bn from €9.28bn in 2Q11.

However, there was good news for the firm, as sales of its Lumia handsets, which run on the Microsoft Windows Phone platform, reached four million units, double what it sold in the previous quarter. The company’s reserves of cash also improved by €306m year-on-year, primarily due to receipts from patent licenses and support payments from Microsoft.

“Nokia 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 and carefully manage our financial resources,” said CEO Stephen Elop.

He added that the Windows Phone 8 launch will be an important catalyst for Lumia.

“We continued to strengthen our patent portfolio and filed more patents in the first half of 2012 than any previous six month period since 2007.”

Ovum analyst Nick Dillon said that the results were actually slightly better than expected, adding that it is key for Nokia to try to maintain the momentum it has begun to build.

“You couldn’t call them good results, but when you take them in the context of what the market was expecting, it is not quite that bad, there glimmers of hope for Nokia buried in there,” he said.

“The company has managed to double its Lumia sales consistently over the last two quarters now, and they need to keep that momentum going. For Nokia, it’s a case of really having to take it one quarter at a time.”

Network infrastructure unit Nokia Siemens Network (NSN) also posted a €227m operating loss, more than double the €111m operating loss the firm made in 2Q11 and net sales also fell year-on-year from €3.6bn to €3.34bn. However, the performance marked an improvement on the dire Q1 the firm suffered, when it made sales of €2.9bn and a staggering €1bn operating loss.

“We are encouraged that Nokia Siemens Networks returned to underlying operating profitability through strong execution of its focused strategy,” added Elop.