Nokia swings to Q3 loss, but scores win in low-end phones
Nokia (NYSE:NOK) reported a smaller than expected net loss for the third quarter and continued its transition to using Microsoft's (NASDAQ:MSFT) Windows Phone platform. The company, which continues to lose ground in smartphones, posted a year-over-year increase in overall handset sales, driven by lower-end devices.
Nokia reported a net loss of around $94 million for the third quarter, smaller than analysts' expectations of a loss of $315 million, according to Bloomberg, and narrower than the loss of $506 million Nokia had in the year-ago period. Overall, net sales fell 13 percent to $12.35 billion, down from $14.12 billion, driven by a 38 percent drop in smartphone shipments year-over-year. In the company's key devices and services business, overall sales declined 25 percent to $7.4 billion.
In the quarter Nokia shipped a total of 89.8 million handsets, up 8 percent from the year-ago period, which Nokia said was driven by shipments of its dual-SIM devices for emerging markets, which climbed to 17.9 million in the quarter, as well as stronger sales of Qwerty devices. "Our results indicate that our sales execution and channel inventory situation have improved," Nokia CEO Stephen Elop said, according to the Wall Street Journal.
Interestingly, the company may have been aided by a drop in its overall handset average sales prices, which fell to $70 from about $89. "By holding the line on global market share now, Nokia lives to fight another day--and gets the shot at trying to carve out a budget smartphone niche with its Windows devices," MKM Partners analyst Tero Kuittinen wrote in Forbes.
On smartphones, the picture was less pretty. Nokia shipped 16.8 million smartphones in the quarter, down 38 percent from 27.1 million in the year-ago period. Smartphone sales also dropped 39 percent. The figures underscore the challenge Nokia faces in catching up to Apple (NASDAQ:AAPL) and the pack of smartphone makers using Google's (NASDAQ:GOOG) Android platform. Elop is expected to unveil the first Nokia devices running Windows Phone next week at the Nokia World conference in London.
In Nokia's network infrastructure joint venture with Siemens, Nokia Siemens Networks, the firm posted a third-quarter operating loss of $157 million, narrower than the loss of $388 million in the year-ago period. Sales jumped 16 percent to $4.7 billion, but also reflect NSN's acquisition of Motorola Solutions' (NYSE:MSI) networking business, and so Nokia said its results are not directly comparable to those of prior quarters. Nokia and Siemens have said they will inject around $1.4 billion into the company.
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