Cash growth spares Nokia's blushes
Nokia may the only company in tech history to benefit from declining earnings, with the firm’s share price jumping despite operating losses growing year-on-year in the second quarter.
The handset maker yesterday revealed its operating loss for 2Q12 was almost double that of the same period in 2011 - €826 million compared to €487 million in 2Q11. Sales are down 19% year on year to €7.5 billion, as lower revenue from the firm’s devices business and Nokia Siemens Networks joint venture offset a 4% rise from its location and commerce division.
However, an increase in the firm’s net cash position seems to have saved its bacon in the eyes of investors. Cash from operations hit €102 million in 2Q12, compared to a loss of €176 million in 2Q11, and its overall net cash and other liquid assets hit €4.1 billion in the recent quarter – an increase of 8% on 2Q11.
Markets were also buoyed by better-than-expected smartphone sales during the period, Reuters reports, resulting in an 18% increase in the vendor’s share price.
There is also hope for the vendor in the back-half of 2012, according to Strategy Analytics, which predicts Nokia will be one of three key vendors fueling a rise in sales of Windows Phone devices in the US this year.
Senior analyst Scott Bicheno explains overall smartphone sales in the market are set to grow 21% year-on-year to 123 million units, with Microsoft’s share set to rise from 3% in 2011 to 4% in 2012. “Nokia, HTC and Samsung have some of the biggest Microsoft smartphone portfolio’s at present, and they will be three main hardware vendors driving growth this year.”
The prediction is good news for Nokia, which has traditionally struggled to make headway in the US. The firm’s 2Q figures show it is already making progress in the overall North America region, with device sales in the region up 45% year-on-year to €128 million.