Nokia smartphone sales plunge, but Lumia leads bounce back in Q4

Nokia smartphone sales plunge, but Lumia leads bounce back in Q4

Summary: Nokia has published its final-quarter and full-year results for 2012. Despite making a €2.3 billion loss for the year, it showed signs of a revival in the last three months.

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Nokia has published full-year financial results for 2012 and, while they show a dramatic drop in device sales and a loss for the year, there are signs of life at the handset maker.

Nokia's full-year revenue fell 22 percent year on year to just over 30 billion euros (US$40 billion), down from 38.6 billion euros (US$51.6 billion) in 2011, according to the results, which were published on Thursday. The company cited "competitive industry dynamics" as a continuing issue for its future outlook.

However, despite the drop in revenue, Nokia reported 4.4 million Lumia handsets sold during the last three months of 2012. Overall, it made a 2.3 billion euros (US$3.07 billion) loss for the year, but posted a profit of 439 million euros (US$586 million) for the final three months of the year.

Nokia received $250 million per quarter from Microsoft as a "platform support payment"--that is, for using Microsoft's Windows Phone platform in its devices--the results show, meaning that Microsoft's payments accounted for approximately one thirtieth of its total revenues for the year.

Nokia's board has now proposed no dividend for shareholders should be made for 2012--thought to be the first time it has suspended dividends in decades.

"We are very encouraged that our team's execution against our business strategy has started to translate into financial results," Stephen Elop, chief executive of Nokia, said in a statement.

"While the first half of 2012 was difficult for Nokia Group, in Q4 2012 we strengthened our financial position, improved our underlying operating margin in Devices & Services, introduced the Here brand to expand our mapping and location experiences, and drove record profitability in Nokia Siemens Networks," it added.

Nokia made half as much money from smartphones last year than it did in 2011, the results show -- down from 10.8 billion euros (US$14.4 billion) to 5.4 billion euros (US$7.2 billion).

"We are very encouraged that our team's execution against our business strategy has started to translate into financial results"
- Stephen Elop, Nokia

While the company reported falling "smart device" sales in almost all regions, Nokia said the effect was partially offset by increasing numbers in North America and Europe. Over 2012, it shifted 35 million smartphone units, compared to 77 million the year before. Non-smartphones, however, were less badly hit, falling from 340 million units in 2011 to 301 million in 2012.

The full-year results have also shown how some of Nokia's earlier restructuring has affected the company. Total staffing levels have dropped by over 30,000 during the course of the year; at the close of calendar 2011, Nokia (including Nokia Siemens Networks) employed 130,050 people. By the end of calendar 2012, that had decreased to 97,798, following the announcement of thousands of redundancies last June.

Its decision to outsource the support and maintenance of Symbian to Accenture, announced in 2011, came at a cost of 251 million euros (US$335 million). Nokia announced in 2010 that it was to stop developing the platform, and confirmed in the results today that the Pureview 808 would be its last Symbian device.

Since 2010, Symbian device shipments have experienced what Nokia describes as "large decline," with only 2.2 million Symbian-powered devices sold in the final quarter of 2012.

"We expect our Symbian devices to account for a significantly smaller portion of our overall Smart Devices volumes in the first quarter 2013 and going forward," Nokia said.

The results also showed that the sale of its Vertu luxury phone brand brought Nokia 52 million euros (US$69 million), far lower than the hundreds of millions of euros is was expected to fetch. Last year also saw Nokia paid 21 million euros (US$28 million) for the settlement of a cartel lawsuit in the fourth quarter, bringing its earnings from such lawsuits to 56 million euros (US$74 million) for the year.

ZDNet's Jo Best contributed to this report.

Topics: Nokia, Mobility, Smartphones, EU

Ben Woods

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44 comments
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  • Nokia Lumia

    My wife just got a Nokia Lumia 920. It's a great device, and she likes it much, much more than she did her Samsung Android device. It's better in pretty much every way a phone can be better.

    I concur.
    bb_apptix
    • Not until....

      she realized that she can't do the following:

      1. Can't attach more than 1 office document attachments to an single email.
      2. Can't see who likes her comments on Facebook.
      3. Can't even create a simple playlist right on the phone.
      4. Can't read pages she likes on Facebook in People Hub.
      5. Can't navigate to photo albums from posts right in the People Hub.
      6. Wifi can't be stayed on when phone is in sleep mode (patch coming but when?)
      7. Can't have proper Whatsapp session because she is using it on a Windows Phone platform instead of Android.

      Wish your wife best of luck!
      chmun77
      • Not everyone wastes their day on social

        What in the world is Facebook?
        Regulator1956
      • Half of your gripes are with Facebook functionality?

        Give me a break. Who cares about Facebook? Whatsapp? Its mostly trivial. You fail to note the positives - best in class battery life. Speed comparisons to other handsets are laughable. The ease with which apps are opened, organised and installed is brilliant. Camera integration to Skydrive. Nokia Maps and Drive. 'Bearable' touchscreen keyboard, etc. There are a lot of positives.

        A valid negative point though would be that Skype does not work on lower end Windows handsets such as the Lumia 610 - now that is a joke and cause of fragmentation. But Facebook - nope don't care.
        12312332123
        • Well last time I've checked ...

          More than 1 billion! And I'm not in that billion either :)
          Seriously I think a good facebook experience is very important.
          AleMartin
    • 920

      I dumped my iPhone 4s for the Lumia 920. I love it. Awesome phone.
      WBCO
  • Nokia Lumia

    My wife just got a Nokia Lumia 920. It's a great device, and she likes it much, much more than she did her Samsung Android device. It's better in pretty much every way a phone can be better.

    I concur.
    bb_apptix
  • Keep in mind how supply constrained Nokia was with Lumia

    I hear that today, claiming you didn't sell more of your product is perfectly okay as long as you claim you were supply constrained.

    Also, if your product wasn't available until November, that also means that you should probably double or triple the reported sales figures because the reported sales figures don't "count".

    At least that is the excuse that I keep hearing today although I'm still trying to figure out if this excuse is valid for ALL companies or just specific ones. Stay tuned.
    toddbottom3
  • Oh, and a big kudos to Windows Phone

    http://gigaom.com/2013/01/22/windows-phone-makes-gains-in-eu-passing-blackberry-in-late-2012/

    "Windows Phone outsold BlackBerry devices in the EU, reaching 5.4 percent of all sales in the region for the 12 week period ending on Christmas."

    Also, Nokia has hit 20% marketshare in Finland:
    http://wmpoweruser.com/windows-phone-crosses-20-market-share-in-finland-starts-taking-share-from-ios-android/

    Please keep in mind that if Finland marketshare numbers don't count because this is Nokia's home country, then US marketshare numbers don't count for US companies. Anyone want to go there?

    Kudos to Microsoft, Nokia, HTC, and Samsung.
    toddbottom3
    • It counts, but Finland is about 60 times smaller

      Nokia could sell a smarphone to every single person in Finland (all ages) per year and they would end up having terrible sales.
      AleMartin
      • Good thing then that Nokia is doing great with their new platform

        In fact, their YoY figures for the Lumia line is about 10 times bigger than apple's YoY growth with the iphone. I only bring this up because we've been told that iphone YoY growth rates are spectacular. What is 10X spectacular? Do we even have a word for something that great?
        toddbottom3
        • Lack of edit

          "Good thing then that Nokia is doing great with their new platform worldwide"

          Lumia sales are up worldwide and not just in Finland.
          toddbottom3
        • Maybe true for Lumia

          But let's look at Nokia smartphones sales:
          Q4, 2010 - 30 million
          Q4, 2011 - 20 million
          Q4, 2012 - 7 million (6.6 to be more exact)

          Worldwide smartphones sales (probably not very accurate):
          2010 - 320 million
          2011 - 430 million
          2012 - 600 million

          Not a very pretty picture for Nokia :(
          AleMartin
          • Nokia is in transition

            They are transitioning from old to new. Their new is doing fantastically well. They are profitable now. The Lumia, their new, is growing FAR faster than the market.

            Besides, I heard they were supply constrained. They would have sold 600 million Lumias last quarter. Or something like that. Or does that excuse not count as of this very second?
            toddbottom3
          • Sometimes I like to be ironic too

            :)
            I think they could have sold 600 million 920 alone.
            AleMartin
          • No, that's pushing it

            There is irony and then there is unrealistic. I would be HIGHLY surprised if Nokia could have sold 600 million Lumia 920s alone. It probably would have been closer to 250 million.
            toddbottom3
          • Transition from bad to worse?

            Don't blame on the supplies. Blame on the demand is low. This is then real story.

            http://blogs.computerworld.com/windows-phone/21683/nokia-earnings-show-some-hope-windows-phone-lumias-lag-us-get-killed-china?source=cwfb

            Stop hiding the Nokia caves.
            chmun77
          • Oh, it transition

            Kind of like we have been hearing for over two years now about WP, it's in transition and will really take off in the next 6-12 months starting in late 2010.
            non-biased
        • You don't honestly think that people believe your drivel do you?

          YoY growth from next to nothing to something sound great when looked at in percentages but when comparing actually numbers it shows how pathetic the Lumia sales actually are.
          non-biased
  • Very bad results for Nokia

    Smartphones sales still decreasing year on year when the market is growing rapidly. Nokia that once had about 1/3 of smart-phone market share, has probably a lot less than 5% now! That's a free fall.
    Some persons emphasis the fact that Lumia sales growth was significant from the previous quarter, but that's not a correct comparison. Comparing the numbers of the Q2 is more accurate because that was when they've launched the Windows Phone 7 devices. In Q2 Nokia sold 4 million Lumias. In Q4 with the smartphone market still growing fast they were able to sell just 10% more of the shiny new Windows Phone 8 devices, during the best quarter of the year.
    I'm sure sales of Q1 will go down again, not as bad as Q3 because back then, Lumias were basically marked as deprecated phones.

    Nokia CEO promised that for each symbian phone lost, a windows phone would be won - how far from that Nokia is performing!

    Sadly Nokia is doomed if they don't change strategy really fast.
    AleMartin