Microsoft's new Nokia mobile unit made a €326m loss last quarter
With the sale of its devices and services business to Microsoft now complete, Nokia has detailed how the unit struggled in the last quarter.
In its interim results published today, the company said that during the first quarter of this year, its devices and services business brought in €1.9bn in revenue, but made a €326m loss — meaning revenue fell 30 percent year on year, and its loss widened five percent compared to the same quarter in 2013.
According to Nokia, sales of its 'Mobile Phones' range — devices that don't run Windows Phone — were down year-on-year, while its Microsoft-powered Lumia 'Smart Devices' were up. Both, however, were down compared to the previous quarter.
While Nokia isn't providing any details on how many handsets of either type were sold, the figure will fall somewhere between the 8.2 million it sold in Q1 2014 and the 5.6 million it sold in Q4 2013.
"On both a year on year and sequential basis, our Mobile Phones net sales were affected by competitive industry dynamics, including intense smartphone competition at increasingly lower price points and intense competition at the low end of our product portfolio. Our Smart Devices net sales were affected by competitive industry dynamics including the strong momentum of competing smartphone platforms," Nokia said.
For the remaining parts of Nokia, Q1 saw revenue fall 15 percent year on year to €2.6bn, while profit rose to €212m, up from last year's €30m loss.
All three of the units that will remain part of Nokia post-sale showed a year-on-year rise in profit. Its networks business, historically known as NSN, saw profit grow by 10 percent to €216m, its Here mapping unit turned a €5m loss into a €10m profit, and its patents and R&D business was up 18 percent to €86m. However, two of the three units — networks and Here — saw overall sales drop.
Nokia attributed the drop in networks sales to "divestments of businesses not consistent with its strategic focus"; getting out of some contracts and countries; and currency fluctuations. While it's been hit by a slowdown of LTE rollouts by US operators and lower spending by their European counterparts, China was a bright spot for the company, thanks to the country's telcos deploying TD-LTE networks.
For Here, external sales were up year on year as a result of an uptick in the number of vehicles sold using its in-vehicle software — 2.8 million for the quarter.
Nokia's Technologies unit, which looks after its IP activities, put the increase in both profit and sales down to a jump in licensing income, as a result of signing new deals — such as the recent agreement with HTC.
The company also revealed its plans for the income from the sale of its devices and services business to Microsoft: issuing €800m of ordinary dividends over this year and next, and a special dividend of €0.26 per share, or around €1bn in total, scheduled for 2014. It also intends to cut debt by €2bn in 2016, and repurchase €1.25bn of shares next year.
The Microsoft acquisition was originally supposed to come in at €5.4bn. However, as a result of the deal closing later than expected, that price has risen by €170m "as a result of the estimated adjustments made for net working capital and cash earnings", Nokia said.
Nokia today also appointed a new chief exec to take over from interim CEO Risto Siilasmaa: Rajeev Suri, who has until now headed up its networks business, will run the company from next month.