Nokia (NYSE:NOK) reported a year-over-year and sequential drop in device sales in North America, but CEO Stephen Elop also hinted that the company will soon bring a "hero" Lumia Windows Phone smartphone to a top U.S. carrier, likely Verizon Wireless (NYSE:VZ).
While Nokia managed to narrow its net loss for the quarter thanks to cost cutting, rising Lumia smartphone sales and strong results from its Nokia Siemens Networks joint venture, the company also posted its smallest quarterly revenue in 13 years as its overall mobile phone shipments plunged.
Overall, Nokia's net loss in the period shrank to $355.3 million, down from a loss of around $1.2 billion in the first quarter of 2012. Analysts had expected Nokia to report a loss of $567 million, according to the Wall Street Journal. Nokia's net cash increased to $5.87 billion from $5.74 billion at the end of December.
Nokia's improved finances are largely a result of its cost cuts, spearheaded by the 10,000 job cuts Nokia announced in June 2012. At the end of the first quarter, Nokia said its devices and services unit and common corporate units had around 31,600 employees, down nearly 15,500 employees, or 33 percent, from the first quarter of 2011, and down nearly 1,600 jobs compared with the third quarter of 2012.
Despite the improved bottom line, Nokia's sales slumped in the first quarter to $7.64 billion, down 20 percent from $9.6 billion in the year-ago period. Analysts had expected sales of $8.5 billion, according to the average of estimates compiled by Bloomberg.
Nokia's total mobile phone shipments (including low-end feature phones and high-end smartphones) fell to 61.9 million, down 25 percent from 82.7 million in the first quarter of 2012. The company's shipments fell in every region around the world.
However, Nokia reported rising Lumia shipments--Nokia is banking much of its future on smartphones running Microsoft's Windows Phone operating system. During the first quarter Nokia shipped 6.1 million smartphones, of which 5.6 million were Lumia phones (500,000 were Symbian units). The 5.6 million Lumia shipments is a quarterly record for Nokia, up from 2 million in the year-ago period and 4.4 million in the fourth quarter of 2012. Nokia said in the first quarter of 2013, approximately two-thirds of its Lumia volumes were Windows Phone 8-based products. The company also sold 5 million of its Asha touchscreen phones.
"People are responding positively to the Lumia portfolio," Elop said in a statement. "On the other hand, our mobile phones business faces a difficult competitive environment, and we are taking tactical actions and bringing new innovation to market to address our challenges."
In North America, Nokia shipped 400,000 units, down from 600,000 in the year-ago period and 700,000 in the fourth quarter. The phones were likely all Lumia phones running Microsoft's (NASDAQ:MSFT) Windows Phone platform.
And it appears Nokia is working to counter declining sales in the United States. According to The Verge, Elop said on the company's earnings conference call that "later this quarter a new Lumia device is anticipated to have hero status with a leading U.S. carrier." Rumors have indicated that Verizon will soon launch the Lumia 928, a high-end device similar in many respects to the Lumia 920 AT&T Mobility (NYSE:T) launched late last year.
Verizon launched the mid-range Lumia 820 in the fourth quarter but did not accord it special status in its device lineup. Getting heavy promotion from Verizon would likely help not only Nokia but the wider Windows Phone ecosystem, which has struggled to gain traction with consumers, especially in the U.S. market. According to The Verge, Microsoft will team with Verizon to help market the product.
Elop said this new Lumia will "mark the beginning of a season of new product introductions." According to the Financial Times, which cited unnamed sources, Nokia will release a number of flagship products this year, including its first "phablet." Nokia declined to comment on the report.
Phablets (a portmanteau of "phone" and "tablet") typically have screen sizes of 5 inches or larger, and have generated significant traction in the market. Some analysts have said that Nokia is struggling in part because it does not offer a phone with a supersized screen. Nokia is also expected to bring its PureView imaging capabilities to the Lumia line this year.
- see this release
- see this WSJ article (sub. req.)
- see this Reuters article
- see this Bloomberg article
- see this The Verge article
- see this FT article (sub. req.)
- see this separate The Verge article
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