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

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.
Written by Ben Woods, Contributor

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.

Editorial standards