Nokia beats forecasts, but loses staff
Nokia’s new boss Stephen Elop says the firm must take a fresh approach to the mobile market, despite returning to profit in the third quarter.
The firm generated net profit of €529 million ($735.9m) in 3Q10 on sales of €10.2 billion - overturning a €559 million loss in the same period last year - but lost ground in the handset market, where its market share slipped to 30% and the firm revised its full-year shipments down.
Elop said recent results showed the firm must “reassess our role in and our approach to this industry.”
He pledged to make “strategic and operational improvements,” to steer the company through a “remarkably disruptive” period in the mobile business.
The firm will aim to speed up software development, beef up its web services, and slim down its workforce by 1,800 – roughly 3% of its total staff - the New York Times reported.
Shortages of components for the firm’s low- and mid-tier handsets hit device shipments, which grew 2% to 110.4 million units. However, smartphone sales rose 61% year-on-year to 26.5 million – enough to give it a 38% share of the global market, according to Nokia’s estimates.
However, the firm conceded it will lose market share in 2010, updating its previous prediction of maintaining 2009 levels, and stating that component shortages would likely continue to impact its performance in 2011.
The vendor is almost solely reliant on its devices and services businesses at present, as location subsidiary NAVTEQ and equipment JV Nokia Siemens Networks continue to generate losses.
NAVTEQ cut its operating loss from €68 billion in 3Q09 to €48 billion this quarter, while NSN reduced a €1.1 billion loss to €282 million in 3Q10.
Nokia closed out the quarter with operating cash flow of €439 million.
Despite Elop’s caution, the results beat analyst’s forecasts of a €229 million profit, WSJ.com said, while investment banks are optimistic Nokia’s new range of handsets position it well for a recovery in 2011, FT.com said.
Nokia’s NYSE ADRs rose 4.16% following the earnings release, but fell 0.53% in after-hours trading.