Nokia (NYSE:NOK) reported an increase in its overall smartphone sales during the second quarter, but the results came in below analysts' expectations and pushed the company's shares down in early morning trading.
Nokia shipped 7.4 million smartphones in the second quarter, almost all of which were Lumia Windows Phones, up 32 percent from the first quarter but missing the 8.1 million units that analysts had expected, according to a Reuters poll. (However, as The Verge pointed out, Nokia's Lumia sales in the quarter surpassed the 6.8 million smartphones that BlackBerry (NASDAQ:BBRY) sold during the period.)
In the North American market, Nokia shipped 500,000 devices, and most of them were likely Lumia smartphones. That figure is down slightly from the 600,000 devices Nokia shipped in the market in the year-ago quarter but up slightly from the 400,000 the company shipped in the first quarter of this year.
The company's North American sales figures are notable considering Nokia has made a concerted push to increase sales and exposure in the U.S. market, specifically through new Lumia devices available through AT&T Mobility (NYSE:T), T-Mobile US (NYSE:TMUS), Verizon Wireless (NYSE:VZ) and others.
"Despite completely new Windows phone line and support from new partners, Nokia's US smartphone vol dropped YoY. It is over," tweeted industry observer Tero Kuittinen. However, the Lumia 928 on Verizon only launched in mid-May, halfway through the second quarter, and the Lumia 925 for T-Mobile did not launch during the second quarter.
Nokia is continuing to expand its U.S. efforts. The company recently announced its Lumia 1020 with a 41-megapixel camera for AT&T.
The average selling price for Nokia's smartphones fell to around $205 in the second quarter from $250 in the first quarter. "This implies that sales of the flagship Lumia 920 dropped sharply, while demand moved rapidly towards the cheap Lumia 520," Kuittinen wrote for BGR. "This might be OK in the long run, if Nokia can ship big volumes of low-end smartphones with decent margins."
Nokia's stock was down around 3 percent immediately following its earnings report to around $3.80 per share.
Nokia CEO Stephen Elop pointed to the company's improving global sales of Lumias, and hinted at improving sales for the remainder of the year: "Overall, Lumia volumes grew to 7.4 million in the second quarter, the highest for any quarter so far and showing increasing momentum for the ecosystem. During the third quarter, we expect that our new Lumia products will drive a significant part of our Smart Devices revenue."
Nokia's low-end phone sales also missed analyst estimates, according to Bloomberg. The company shipped 53.7 million basic phones, missing the 54.4 million sales mark expected by analysts. As a result, Nokia said it will "focus its product offering with the aim of improving product competitiveness and delivering more innovation." The company said the restructuring effort would affect 440 jobs globally "while also creating a number of new positions and offering possibilities for redeployment." Those job cuts are in addition to the more than 20,000 jobs Nokia has already cut.
As for the company's financials, Nokia reported that overall net sales fell 24 percent in the quarter to $7.45 billion, and sales in Nokia's key devices and services unit dropped 32 percent to around $3.56 billion. However, Nokia was able to cut its second-quarter net loss, thanks to improvements at Nokia Siemens Networks and job and cost cuts. Nokia posted a net loss of around $297 million, an improvement from the $1.84 billion net loss it reported in the year-ago period, and better than analysts' forecasts of a $361 million loss, according to the Wall Street Journal.
After years of sitting atop the global mobile phone market, Nokia is struggling to compete with smartphone heavyweights including Samsung and Apple (NASDAQ:AAPL). Nokia's business is also being pressured at the low end of the market, especially by low-cost Android device in emerging markets, which Nokia has sought to address through its Asha line of touchscreen devices.
- see this release
- see this WSJ article (sub. req.)
- see this Bloomberg article
- see this Reuters article
- see this The Verge article
- see this FierceBroadbandWireless article on NSN's performance in the quarter
- see this BGR article
Special Report: Wireless in the second quarter of 2013
Nokia's smartphone chief says exclusive carrier deals are worthwhile
Can enhanced camera functionality alone help Nokia regain its smartphone supremacy?
AT&T to sell Nokia Lumia 1020 41-MP Windows 8 smartphone
Nokia betting on high-powered camera to differentiate new smartphone
Nokia's Lumia 1020 camera bet may not be enough to challenge rivals
Nokia's N. American sales drop, but Elop hints at new 'hero' Lumia for U.S.