Lumia shipments hit new high as Nokia cuts losses, but sales still shrinking

Lumia shipments hit new high as Nokia cuts losses, but sales still shrinking

Summary: Nokia has turned in its results for the second quarter of this year, delivering a curate's egg as it continues its turnaround efforts.

The Nokia 1020 with camera grip accessory. Image: Nokia

Nokia announced mixed bag of results today, with the company seeing sales continuing to fall, but losses seemingly stemmed and Lumia shipments hitting a new high.

Its second quarter results, announced on Thursday, saw Nokia's revenue reach €5.7bn, down three percent quarter-on-quarter but 24 percent down year-on-year. Over the first half of 2013, Nokia's revenue was €11.5bn, down 22 percent year-on-year.

However, it made an operating loss of €115m, compared to the loss of €826m in the second quarter of 2012, and €150m a quarter ago. (As well as the oft-mentioned cost controls brought in of late, including travel bans, a sizeable drop in headcount has probably helped here: there are almost 26,000 fewer Nokians this year compared to last.)

Device volumes also told a shrinking story, with sales of both its smartphones and lower-end featurephones decreasing by 27 percent year-on-year.

Nokia's Mobile Phones unit, which deals with non-smartphones, sold 53.7 million devices in the second quarter compared to 73.5 million a year ago. However, demand "demonstrated some signs of recovery in the latter part of the quarter", Nokia said.

In the Smart Device segment, volumes fell from 10.2 million in the second quarter of 2012 to 7.4 million this quarter. However, that may be a victory of sorts: Nokia has finally stopped selling the last of its Symbian phones (six million of which were shipped in Q1, virtually none this quarter), meaning the entirety of Smart Devices sales will now be Lumias.

At 7.4 million Lumias shipped, that's the highest Nokia has managed in any quarter so far, and up on the 5.6 million it sold in the last quarter.

And, thanks to the shift to Lumia, the average selling prices of those devices are on the up: €157 now, compared to €151 a year ago.

It's not all good news with Lumia, of course: year-on-year, Nokia noted device sales were down by 26 percent in Europe and 48 percent in China, which it said was "primarily due to lower sales in our Smart Devices business unit".

According to the most recent figures from analyst house Gartner, Nokia's share of the global mobile market is around 15 percent, making it the second-place handset company behind Samsung. However, it's a different picture in smartphones, where its three percent share makes it the 10th place vendor.

Over the last quarter, Nokia has made a couple of notable additions to its Lumia range: the 925, an all-purpose high-end smartphone, and its current imaging flagship, the 1020, which comes with a 41-megapixel sensor.

It also moved to address the earlier drop in demand for its featurephone line, adding a new top-of-the-range Asha, the 501, and updating the OS, Series 40,  that underpins most of its lower-end devices to bring in more smartphone-type UI features.

Expect more product revamping at the lower end, according to chief executive Stephen Elop.

"Our Mobile Phones business unit started to demonstrate some signs of recovery in the latter part of the second quarter following a difficult start to the year. Also, towards the end of the second quarter, we started to ship the Asha 501, which brings a new design and user experience to the highly competitive sub-100 USD market. While we are very encouraged by the consumer response to our innovations in this price category, our Mobile Phones business unit is planning to take actions to focus its product offering and improve product competitiveness," he said in a statement.

There will also be a restructure of the Mobile Phones unit, which will result in 440 layoffs, the company said.

Elsewhere, the company gave its bottom line a sizeable boost by buying Siemens out of the companies' joint venture, Nokia Siemens Networks. Unlike Nokia itself, the networking business has remained profitable over the last year and beyond.

For the current quarter, NSN bought in around half of Nokia's overall revenue.

On the services front, again, there are highs and lows. Revenue from Nokia's mapping business Here rose by eight percent quarter on quarter, but was down 18 percent on last year. The 2013 growth comes from more vehicle sales with Honda, Nissan and Ford, the company said.

Third quarter outlook

Nokia is predicting a two percent operating loss for the third quarter of this year.

"This outlook is based on Nokia's expectations regarding a number of factors, including:

  • competitive industry dynamics continuing to negatively affect Devices & Services;
  • consumer demand for our products;
  • ramp-up for our high-end Lumia smartphones and new Mobile Phones devices;
  • expected increases in Devices & Services' operating expenses; and
  • the macroeconomic environment," Nokia said in a statement.

 However, it also expects higher sales too, thanks in part to new Lumia devices joining its lineup.

Topics: Mobility, Nokia, Smartphones, Windows Phone

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  • Only Making A 20% Loss On Each Lumia Sold

    So, any word on likely acquisition suitors to buy out the company and bring it to its senses before it disappears completely down the plughole?
    • Now where did you get that from?

      A 20% Loss On Each Lumia Sold?
      William Farrel
      • Lets Not forget

        Microsoft is paying Nokia 1 billion dollars a year to push Windows Phone 8. So is Nokia REALLY loosing money here?
        Fat Albert 1
  • The tough days are now behind Nokia

    The lumia sales are really picking up and its transition from Symbian to Windows in complete. We can see production ramping up soon, also Windows Phone has reached critical mass, which means more sales for Nokia.
    • Why is it?

      Why is it that the Fanboys have such a hard time understanding that "units shipped" does not necessarily mean "units sold". Since the market (and other phone manufacturers ) have pretty much dismissed WP8, I could see the big carriers negotiating extremely favorable terms with Nokia, such as no payment until activation, and Nokia desperately agreeing to the terms to prevent further market share decline. The Nokia year-end financials will finally tell the story on just how big of an albatross WP8 is around Nokia's neck.
      • Got it

        "I could see the big carriers negotiating extremely favorable terms with Nokia"

        But you have no proof.

        Got it.
        • Oh Toddy!

          You must have mis-read, again!

          "The Nokia year-end financials will finally tell the story on just how big of an albatross WP8 is around Nokia's neck."

          Got it?
  • Another great quarter for Nokia

    7.4 Million Lumia's sold. With the 1020 and the 520 being so popular I can see 10 Million being sold next quarter.

    Just keep pushing harder and they'll get there.
    Dreyer Smit
    • 1/2 million US sales

      1/2 million US sales for this quarter is pretty dreadful. i think most of them were sold to TV shows, where Microsoft is a product placement corporate sponsor, like NCIS/H50.

      Not at critical mass in the US, despite Nokia being the primary Windows Phone manufacturer.
      • Carrier Exclusive Deals hurting sales

        It's never going to reach critical mass until they stop making carrier exclusive deals. By the time Verizon and T-Mobile can purchase the Lumia 1020, the buzz will have worn off and they'll be eying the next latest, greatest thing.
    • Well...

      Given that the 1020 hasn't been released yet, there's no real claim to be made about its popularity. Just sayin. Yes, pre-orders did sell out at AT&T, but AT&T hasn't disclosed how many devices were available for pre-order. Apple's lesson to the smartphone community is that pre-orders always have to sell out, or you look very bad. Heck, even Microsoft's Surface RT sold out on pre-orders, and no one's buying those in volume. So if it's revealed that Nokia has an Apple-like stock of 1020's (1-2 million or more) and sold those out, great, they have it hit out of the park. If it's only 100k at launch... yawn.
    • So,

      7.4 million is good, eh? You do realize that Blackberry sold 6.8 million BB10 units in the second quarter and everyone is calling that a failure.
      • Incorrect

        Blackberry sold 2.7 million BB10 devices in their second quarter (March-May).
  • Not good news

    Still losing money and also marketshare year over year. That is a really big problem

    I hope they change something or it will be hard in the near future. They are making amazing phones and i hope they will continue
  • Not so good results, but not bad

    Handset sales are going down too fast, Lumia sales were better than I expected but far from stellar, also €157 for such number of Lumia sales it's too short - On Q1 price was much higher, but I understand the need to build market share.
    I suppose Nokia is ahead of blackberry now - yay.

    With this results, Nokia can stay afloat, but it's not going to make a blast.
    • BB need full quarter of keyboard phone sales to tell its story.

      And that may mean that some ex-Nokia users will switch to BB. (As ex-Nokia users tendet to love SMS, and phisical keyboards..)
      • It's not just that

        They need a complete line of last generation smartphones. I'm not so convinced that keyboards are the future - even for blackberry.
        For Nokia this was a quarter at full steam, they have now a complete line of Lumia devices (maybe the new 1020 "camera phone" will complete it).
        I still believe Nokia will stay ahead of blackberry.
  • non-IFRS numbers

    show big profit of €303m ($397m) which is way far ahead than predicted €37 m. I guess it will start to make profit after couple of quarters.
  • How many of those Lumias are WinPhone 8?

    Remember, of the 5.6m Lumias sold 1st quarter, only about 3.6m of them were WinPhone 8, the rest were empty-the-shelves sales of obsoleted WinPhone 7 devices. Has anyone pieced through the figures to determine how many of the 7.4m Lumias sold this quarter were WP8?
  • 8m less Symbian, 1.8m more Lumia - how is that success?

    Hmm ... that's what fanbois are calling success nowadays? Compared to 1st quarter, they dropped sales by 8m Symbian smartphones, but only picked up 1.8m Lumias?