Nokia (NYSE:NOK) beat analysts' expectations with strong third-quarter results, but also said it will cut 1,800 jobs as part of a reorganization of its Symbian smartphone production. This is the company's first major strategic action since Stephen Elop took over as CEO last month.
The company posted a net profit of $740 million, a sharp reversal from a loss of $784 million in the year-ago quarter, when the company was hit with impairment charges. Elop said in a statement that the Finnish firm "faces a remarkably disruptive time in the industry, with recent results demonstrating that we must reassess our role in and our approach to this industry."
Nokia has banked its position in the smartphone market on a revamped version of the Symbian platform as well as the forthcoming MeeGo operating system that it developed with Intel. Former CEO Olli-Pekka Kallasvuo exited after being criticized for not doing enough to keep pace with other smartphone operating systems, including Google's Android and Apple's (NASDAQ:AAPL) iOS. Nevertheless, Nokia continues to dominate the worldwide smartphone market thanks to Symbian's reach.
The handset maker said the 1,800 job cuts--close to 3 percent of its workforce--will come from Symbian smartphones services, research and development and corporate functions--Nokia is combining development efforts for its Symbian^3 and Symbian^4 efforts. The company recently began shipping Symbian^3 phones, including its flagship N8 device. Elop said during the company's earnings conference call that Nokia's first MeeGo device "will be a 2011event."
Sales for the quarter were $14.4 billion, up around 5 percent from the year-ago period. Sales in the company's key devices and services unit rose 4 percent from the year-ago quarter to $10.09 billion. Nokia hiked its full-year operating margin guidance for the devices and services segment to 10-12 percent, from 10-11 percent previously.
"I think it's an excellent report given that the company's portfolio of products was very weak in the quarter," Morgan Stanley analyst James Dawson told Reuters. "The handset profits are 30 percent ahead of expectations, so it's clearly a very big beat versus what the market was looking for."
Nokia shipped a total of 110.4 million handsets in the quarter, up 2 percent year-on-year and down 1 percent sequentially. The company shipped 26.5 million smartphones in the quarter, up 61 percent from the year-ago period and 10 percent sequentially. Nokia said its overall handset market share was 30 percent in the third quarter of 2010, down from an estimated 34 percent in the year-ago period and 33 percent in the second quarter. The company's smartphone market share was 38 percent in the quarter, compared with 37 percent in the third quarter of 2009 and 41 percent in the second quarter. The company's average selling price rose to $91.16, which marked the first annual sales price rise in three years.
For Nokia Siemens Networks, the company's infrastructure joint venture with Germany's Siemens, Nokia reported net sales of $4.12 billion, up 7 percent from the year-ago period but down 3 percent sequentially. Nokia Siemens posted an operating loss of $162.6 million, wider than a loss of $74.3 million in the year-ago quarter. The company's operating margin was -3.9 percent, weaker than -1.9 percent in the third quarter of 2009 and 1.7 percent in the second quarter. Nokia said it continues to believe the infrastructure market will be flat this year compared with 2009, and that NSN will maintain its market share in 2010.
- see this release
- see this WSJ article (sub. req.)
- see this Bloomberg article
- see this Reuters article
- see these two Engadget posts
- see this Reuters article
- see this FierceWireless Q3 earnings page
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