Nokia Q1: Lumia shipments up 25 percent
Summary: The Finnish phone maker tumbles after its profitable fiscal fourth quarter as it dips back into the red again.
Nokia reported its first quarter earnings on Thursday, sending a clear signal to partner Microsoft that it continues to struggle getting back on the financial track.
The report comes only a few days after Microsoft, Nokia's partner in the smartphone space, sent a strong signal that it thinks the Finnish phone maker is doing "great," and has no plans to roll out a coveted Surface Phone of its own.
The phone maker reported a first-quarter net loss on sales of €5.85 billion ($7.64bn), or €0.02 ($0.03 cents) a share, down from €0.08 a year ago.
Nokia was expected to make a loss of €0.04 ($0.05) per share on revenue of €6.63 billion ($8.73bn). Compared to the year ago quarter, however, when Nokia announced an operating loss of €1.34 billion on €7.35 billion in revenue, things are certainly looking better.
The company's operating loss was €150 million ($195.9m), representing an overall operating margin of -2.6 percent.
By the numbers:
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Lumia shipments were 5.6 million, up from 4.4 million in the fourth quarter
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Around two-thirds of all Lumia shipments were Windows Phone 8-based products
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Total smart device sales totaled 6.1 million during the quarter
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Total volume sales were down 25 percent year-over-year
Analysts were expecting between 4.8 and 5.8 million Lumia devices sold during the three-month period ending March 31.
Nokia also noted that it ended the quarter with €4.5 billion ($5.88bn) in cash, down from €4.9 billion ($6.39bn) cash on the same quarter a year ago.
Across all geographic areas, sales were down year-over-year and quarter-over-quarter. China saw the steepest drop in shipments from Q1 2012 to Q1 2013, while North American markets saw the greatest quarterly dip from Q4 2012 to Q1 2013.
Nokia chief executive Stephen Elop said he was pleased that Nokia "achieved underlying operating profitability for the third quarter in a row." He noted that tough competition in the smartphone market was the main reason behind the fall in phone sales.
We have areas where we are making progress, and areas where we are further increasing the focus. For example, people are responding positively to the Lumia portfolio, and our volumes are increasing quarter-over-quarter.
Nokia Siemens Networks delivered another strong quarter and contributed to an overall improvement in Nokia Group's cash position. On the other hand, our Mobile Phones business faces a difficult competitive environment, and we are taking tactical actions and bringing new innovation to market to address our challenges.
In pre-market trading, $NOK was down by more than 12 percent at 7 a.m. ET.
Looking ahead, Nokia said it expects second-quarter adjusted handset sales of around -2 percent. The phone maker said that it estimates Lumia shipments to increase by more than 27 percent in the coming quarter.
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Talkback
Zack, do you speak English?
"Things are certainly looking better than this time last year." Were you trying to be sarcastic? Or an attempt to be funny? How old are you?
Corrrected
Still not corrected Zack!
it is more bad news for MS
MS is a huge company with multiple product lines and world class R&D. People expected more, and still do. MS has the resources and the need to got it right. They should continue to dominate in the PC market and will do well with cloud and enterprise services. They are going to continue to struggle in tablets and phones because the competition has better products, lower prices, and are firmly entrenched in the market.
no, not exactly
When the world class R&D
They must be using Excel for their math, same as Zack and Reinhart & Rogoff. :-)
Competition has better products and lower prices? Are you on the same
When it comes to WP8, neither Android nor iOS can even compare to the power and capabilities of WP8. And when it comes to devices, there aren't many out there better than the Nokia line and even the HTC line that are supported by WP8. When it comes to prices, that an immaterial category since, most smartphones lately are sold as part of a cell-phone package, and the price of the device is rolled up into the total package price.
Great spin but mistaken
Shipments up 25% for Lumia, lets see how well Apple did?
apple...
Puts things in perspective really. Even Blackberry managed to sell 1 million phones Z10 this quarter.
A 27% increase in unit sales
No - they are "shipped" units.
Yes!
Are these articles sponsored?
How many businesses
Headline doesn't make sense
And yet your headline says "Worse than expected".
Am I missing something?
There are more than just Lumias
So I WAS WRONG.
But I confess I was expecting Lumia sales to be a complete disaster and they were just bad.
Sadly Nokia is getting smaller and smaller, they are losing in almost every single area.
I still don't think Lumia is going to be a success, or even so-so. Nokia tried hard to push their new line of smartphones into markets where they were very big for a long time, but if we look at the numbers on those markets we can see they are going down insanely fast.
Nokia managed to replace some symbian devices by a brand new Lumia, but I wonder if Lumia devices will be able to win new (not traditional Nokia) buyers in any significant number.
As expected they are still losing money - the previous quarter profit, that many raved about, was due to things like the sell of their headquarters, stocks are going down for sure.
Graph
They usually are like that
This is a turning point for Nokia
1) Windows Phone 8 and the Lumia 920 (the current flagship WP) were only just launched in Q4 2012 (just 6 months ago)
2) WP7 devices (800 and its variants) were intros to the WP platform as WP7 was just a transitional OS on the way to WP8
3) Nokia just introduced its lower priced WP8 handsets (the 520 and 720) at Mobile World Congress in February of this year, along with a couple of new Asha phones, so these devices haven't had time to make any impact to sales, but they will be a factor for Q2 forward
4) In the US, the Lumia 920 on AT&T is really the only meaningful WP8 handset at the moment, but with the 928 soon to be released on Verizon Nokia should see a nice pick-up in US sales
Certainly Nokia isn't out of the woods, but given the success they have had in such a relatively short time with WP8 and Lumia, I think the future holds material upside for those with patience.