Nokia (NYSE:NOK) reported record sales in the third quarter of its Lumia smartphones running Microsoft's (NASDAQ:MSFT) Windows Phone software, and saw a sharp jump in its shipments in the North American market, signs that the company's strategy may be starting to take hold.
In Nokia's devices and services business, sales fell 19 percent to $3.99 billion. The company's smartphone sales grew year-over-year while its feature phone sales declined, continuing a trend that has cut down Nokia's total handset unit shipments. Nokia shipped a total of 64.6 million handsets (smartphones and feature phones) in the third quarter, down 22 percent from 82.9 million in the year-ago quarter.
The company's Lumia smartphone business saw a major lift though. Nokia shipped a record 8.8 million Lumias in the quarter, up from 7.4 million in the second quarter and up significantly from 2.9 million in the third quarter of 2012. Nokia attributed the sequential increase primarily due to the low-cost Lumia 520.
Indeed, the average selling price for Nokia's smartphones fell in the quarter, down year-over-year and sequentially, to around $197, from $213 in the year-ago period and $216 in the second quarter.
In North America, Nokia scored a major win in device sales in the quarter, recording 1.4 million unit sales, almost all of which were certainly Lumias. That figure is up from 300,000 units in the year-ago period and 500,000 in the second quarter.
During the summer Nokia launched Lumias through AT&T Mobility (NYSE:T), T-Mobile US (NYSE:TMUS), Verizon Wireless (NYSE:VZ) and others, including the 928 at Verizon, 925 at T-Mobile and 1020 from AT&T.
Perhaps more importantly, Nokia appears poised to continue its forward momentum. Earlier this month Nokia announced its Lumia 1520 phablet device and its first tablet, the Lumia 2520, which runs Microsoft's Windows RT operating system. Nokia also announced the large-screen Lumia 1320, as well as three new touchscreen Asha phones (the 500, 502 and 503). And Nokia is working to add apps to the Windows Phone platform; the company announced Facebook (NASDAQ:FB)-owned Instagram will finally be coming to Windows Phone in the coming weeks.
And U.S. operators will continue to support Nokia's efforts: AT&T, a key U.S. partner for Nokia, will be the exclusive U.S. carrier for the 1520 and will also support the LTE-enabled 2520 tablet.
As for Nokia's overall performance in the third quarter, the company's company-wide net loss narrowed to $125.3 million, down from a loss of $1.32 billion in the year-ago period. Analysts had expected a net loss of $298.8 million, according to the Wall Street Journal. Overall, company sales declined in the third quarter by 22 percent to $7.8 billion.
Microsoft is set to take over Nokia's devices and services business early next year, which means this could be one of the last financial reports from Nokia about handsets. Microsoft is working to assume control over Nokia's devices and services business, and license its patents, in a deal valued at $7.5 billion. Following the deal, Nokia will retain its Nokia Solutions and Networks business, its HERE location and mapping business and a unit focused on advanced technologies.
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