Nokia Q1 2012 Financials Reveal a $1.7 Billion LossBy: Shawn Hess - April 19, 2012
Nokia reports a loss of $1.7 billion for the first quarter of 2012. Sales at the same time last year reached $13.6 billion, but only achieved $9.7 billion this quarter. Experts don’t expect much of a recovery in the second quarter either. Nokia has struggled with restructuring in several business areas including devices and services, and location and commerce. They have also been dealing with the logistical nightmare of moving their manufacturing facilities to Asia.
Here’s a segment from their 2012 Q1 Interim report accounting for some of their sales loss since last year:
On a sequential basis, the decline in our Mobile Phones volumes in the first quarter 2012 was primarily driven by lower seasonal demand for our feature phones and aggressive price competition, especially in entry-level feature phones, partially offset by sales of recently introduced products which represented a higher proportion of our portfolio. The sequential decline was also due to distributors and operators purchasing fewer of our feature phones during the first quarter 2012 as they reduced their inventories of our feature phones compared to increasing their inventories in the fourth quarter 2011.
In addition, we faced increased competition from more affordable smartphones and competitors with broader portfolios of feature phones with more smartphone-like experiences, such as full touch devices. The sequential decline in our Mobile Phones volumes in the first quarter 2012 was most pronounced in India and Europe, primarily due to the factors mentioned above.
Here’s what Nokia has listed as their highlights for “smart devices” broken down by month in Q1 2012:
* In January, Nokia and T-Mobile commenced sales of the Nokia Lumia 710, the first Lumia product for the United States.
* In January, Nokia announced the Nokia Lumia 900 with AT&T in the United States. The Lumia 900 is the first of Nokia’s Windows Phone-based range to feature high-speed LTE connectivity. The device, which has a 4.3-inch AMOLED ClearBlack Display, went on sale in April.
* In February, at the 2012 Mobile World Congress, Nokia announced that it is bringing the Nokia Lumia 900 to other markets outside the United States in a DC-HSPA variant, for high speed data connection (42Mbits download) in countries where LTE is not available. The device is expected to begin shipping during the second quarter.
* In February, Nokia announced the Nokia Lumia 610, the company’s fourth and most affordable Lumia smartphone, designed as the perfect introduction to Windows Phone for a younger audience. The device is expected to ship during the second quarter 2012.
* In February, Nokia announced Nokia Reading, providing a single, integrated reading hub experience. Nokia Reading makes it easier and faster to enjoy news, books, and audio books including an extensive catalogue of local language reading material and the ability to access content offline.- In March, Nokia and China Telecom announced the Nokia 800C, the first CDMA Windows Phone in China and Nokia’s first Lumia phone for the world’s largest smartphone market. The device went on sale in early April.
* In February, Nokia announced the Nokia 808 PureView, the first smartphone to feature Nokia PureView imaging technologies, bringing together high resolution sensors, exclusive Carl Zeiss optics and Nokia- developed algorithms, which will support new high-end imaging experiences for future Nokia products. The Nokia 808 PureView features a large, high-resolution 41 megapixel sensor and new pixel oversampling technology. The device is expected to ship during the second quarter 2012.
Here’s what Nokia had listed as “mobile phone” highlights for Q1 2012 from the report broken down by month:
* In February, Nokia announced the Nokia Asha 302, the first Series 40-based phone to support Mail for Exchange. The Asha 302 went on sale during the first quarter.
* In February, Nokia announced the Nokia Asha 202, which combines a traditional keypad with a touch screen and features Nokia’s dual SIM Easy Swap technology. The Asha 202 is expected to ship during the second quarter 2012.
* In February, Nokia announced the Asha 203, a single SIM phone which combines a traditional keypad with a touch screen. The Asha 203 is expected to ship during the second quarter 2012.
* Nokia announced an evolution of Nokia Life Tools, now known as Nokia Life, which provides life-enhancing information across the range of Nokia Series 30 and Series 40 products. Since its 2009 launch in India, the SMS- based service has expanded to China, Indonesia and Nigeria. To date, more than 50 million people have experienced its benefits.
* Nokia Browser, Nokia’s cloud-accelerated browser for Series 40 devices, continued to grow rapidly with support for 38 devices in 87 languages and more than 200 countries. During the first quarter, we released a significant upgrade to the product improving speed and access to web apps. Nokia Browser is the first of its kind to support web apps, and since the release of the SDK in 2011, developer support has continued to grow.
Hopefully things will turn around for Nokia by the end of 2012. It sounds like the extreme cost of restructuring and relocating their manufacturing to Asia has really eaten into profits, but this is something that will eventually reach completion. A more serious threat appears to be coming from increased product competition and a dwindling demand for Nokia’s products. We’ll keep an eye on Nokia as 2012 unfolds.