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Nokia losses pile up as sales plunge
Question of the Day
HELSINKI (AP) - Nokia Corp. reported Thursday that its third quarter net loss widened further to (EURO)969 million ($1.27 billion) with a 19 percent plunge in revenue, as it struggles against the dominance of Samsung and the iPhone in the tough smartphone market.
Net sales dropped to (EURO)7.2 billion ($9.45 billion), and Nokia gave a grim outlook for the rest of the year as it prepares for this fall’s launch of Microsoft Corp.’s new phone software, Windows Phone 8.
The Finnish firm said sales of its flagship Lumia phones _ its first Windows-based devices launched a year ago _ dropped to 2.9 million units from 4 million in the previous quarter. It acknowledged it expects no quick gains from the new Windows launch, warning that the current three-month period would be “challenging … with a lower-than-normal benefit from seasonality in volumes.”
Nokia also failed to say when and where the new Lumia 920 and 820 will be launched, except that it will be in “selective” markets during the current quarter.
Investors, some of which had been expecting a bigger drop in sales, pushed Nokia’s share price up more than 10 percent during the day, but the gains did not last. The shares closed at (EURO)2.22 ($2.91) _ up only 1 percent _ on the Helsinki Stock Exchange.
In 2011, the third-quarter net loss was of (EURO)68 million on revenues of (EURO)8.9 billion. While this year’s loss was deeper than analysts’ forecast for a (EURO)610 million shortfall, sales beat expectations of (EURO)6.99 billion.
Analyst Hannu Rauhala from Pohjola bank in Helsinki said Nokia’s performance had been a mild surprise.
“The worst fears are over … and Nokia’s network operations were clearly better than expected,” he said.
The company said its feature phones had shown strong sales on the previous quarter and Nokia Siemens Networks _ its former lossmaking joint venture with Germany’s Siemens AG _ had seen 3 percent revenue growth in the period with an operating profit of (EURO)182 million.
But the slide in Nokia’s smartphone sector continued in the third quarter when revenue dropped more than 50 percent year-on-year to (EURO)976 million, with volumes plunging more than 60 percent to 6.3 million. In the second quarter Nokia sold 10 million smartphones.
Strategy Analytics said it expects Samsung to sell 55 million smartphones in the third quarter and Apple to ship 27 million.
Overall, Nokia sold 83 million mobile devices in the quarter, down slightly from the previous quarter but a plunge of 22 percent from a year earlier, when it had unit sales of more than 106 million. Analysts said they expect Samsung to top 98 million devices in the third quarter.
Neil Mawston from London-based Strategy Analytics said it was too early to bury Nokia as it comes through the transition period.
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