Nokia shrinks losses in Q2 though sales plunge
AFP Updated July 19, 2013, 2:19 am
HELSINKI (AFP) - Finnish mobile phone maker Nokia on Thursday reported a reduced loss of 227 million euros ($298 million) in the second quarter, but sales again fell sharply.
The loss was 84 percent less than in the same period last year, but sales fell by 24 percent to 5.695 billion euros.
The decline in sales of traditional mobile phones continued, dropping 39 percent from the level a year earlier, while smartphone sales were down 24 percent over the same period.
"Sales of low end phones -- a cash cow -- collapsed," said Eric Beaudet, an analyst at investment bank Natixis.
"It's worrying because this division needs to be profitable in order for them to manage the transition (to high end phones)," he said.
Sales of Lumia, the smartphone on which the troubled company has bet its future, rose by 32 percent from the previous quarter to 7.4 million units.
But analysts had expected more.
"Lumia sales were slightly lower than expected," said Hannu Rauhala, an analyst at Finnish bank Pohjola.
Mikael Rautanen of equity research provider Inderes was disappointed by the Lumia's average selling price, which at 157 euros per unit was significantly lower than his own expectation of 175 euros.
Nokia chief executive Stephen Elop said the phone was "showing increasing momentum."
"During the third quarter, we expect that our new Lumia products will drive a significant part of our smart devices revenue," he said in a statement.
Nokia used to be the global leader in making mobile phones but has been overtaken by rivals and is struggling to establish winning business models and mobile devices.
Nokia's losses came in below a 276 million euro loss predicted by analysts polled by Dow Jones Newswires, but the revenue fall was sharper than a 17 percent consensus.
The group has cut costs by reducing its workforce by 23 percent in the past year and by seven percent in the last quarter.
On Thursday the company said it planned to cut up to 400 jobs in its mobile phone division, "while also creating a number of new positions."
Results were also boosted by a turnaround at telecom equipment maker Nokia Siemens Networks, which made a profit of eight million euros, compared with a loss of 226 million euros in the same period last year.
Rautanen of Inderes said NSN had grown in importance for the company after it announced in early July that it was buying joint venture partner Siemen's stake in the firm.
The acquisition would "create value" for shareholders, and would be strengthened "as a more independent entity," Nokia said.
Shares in the company were 4.45 lower in late afternoon trading on the Helsinki bourse, where the main index was down 0.66 percent.
