Nokia reports big loss despite strong Windows Phone sales

Nokia CEO Stephen Elop shows off the Lumia 900 at CES 2012. (Credit: Lori Grunin/CNET)

Change is never easy. Just ask Nokia, which on Thursday posted its third consecutive quarter of hefty losses, despite strong sales of its new Windows Phone portfolio.

For the fourth quarter, the Finnish handset maker said it lost 1.07 billion Euro or $1.4 billion. During the same period a year ago, the company posted a 745 Euro profit.

Overall handset sales dropped by 29 percent compared to a year ago in the fourth quarter. The company sold 19.6 million smartphones during the quarter and 93.9 million feature-phones. In total it sold 113.5 million devices, which is down from 123.7 million total devices in the fourth quarter of 2010. Nokia also saw prices for its handsets fall. The average price for a handset in the fourth quarter was 53 Euro compared to 69 Euro a year ago.

Profit margins also fell considerably on mobile handsets to 3.4 percent. A year ago, Nokia reported profit margins of 12.7 percent on devices. And in the third quarter it reported 12.1 percent.

On the bright side, the company's new Lumia smartphones that use the Windows Phone operating system are selling well. Nokia CEO Stephen Elop said in a press release that the company has already sold well over 1 million Lumia handsets.

Nokia, once the worldwide leader in cell phone sales, has seen sales slip since the introduction of the Apple iPhone in 2007. And Google's introduction of the Android OS only made things worse for the company. In February last year, Elop, the newly appointed CEO, announced that the company would abandon its older Symbian operating system and adopt Microsoft's Windows Phone platform for all new smartphones. The company lost several months as it switched gears. And it's now just churning out products.

The company launched the Lumia line of devices in October in Europe with two devices, the Lumia 800 and Lumia 710. Nokia began selling the Lumia 710 this month on T-Mobile USA. And it's gearing up for a big push in the U.S. with the new Lumia 900, which will operate on AT&T's network. Elop had said at the Lumia 900 launch in Las Vegas at the CES show earlier this month that the company will be aggressive with pricing on the new devices to entice customers.

And on Wednesdsay there was a leak that Nokia will offer the new Lumia 900, which is the first LTE Windows Phone device, at $100 wit a two year contract. The new device will go on sale in March.

While it seems that Lumia line of devices is gaining traction, the company still has a long way to go. Aggressive pricing may give the company a tiny foothold in the U.S., but it's clear that the transition away from its older Symbian operating system to the new Windows Phone platform has not been easy.

About Marguerite Reardon
Marguerite Reardon has been a CNET News reporter since 2004, covering cell phone services, broadband, citywide Wi-Fi, the Net neutrality debate, as well as the ongoing consolidation of the phone companies.