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The Windows Phone push is finally paying off

Nokia Oyj. (HEX:NOK1V) today reported [PDF] that after six quarters of losses, it is at last once again profitable, as predicted.

The Nokia of today is a different one from that of three or four years ago.  The once sustaining backbone of feature phones is not gone -- Nokia remains a top player in this market -- but it is diminished, as Nokia no longer holds the top spot (that belongs to South Korea's Samsung Electronics Comp., Ltd. (KSC:005930)).  And in the smartphone sector sales have shrunk to 6.6 million units -- nearly a third of what it was a year ago.  And most importantly, the majority of those smartphones carry a third-party operating system, Windows Phone, which replaced the proprietary Symbian operating system that once drove Nokia's lineup.

The Windows Phone transition is nearing completion -- in Q4 2012 Nokia sold 4.4 million Lumia Windows Phones, while moving only 2.2 million Symbian phones.

Nokia overall posted a profit of €0.05/share ($0.07 USD/share) before tax, or about €202M ($269.0M USD) in total profit after tax.  That's a huge difference from the €1.07B ($1.43B USD) that Nokia lost in Q4 2011.  But revenue was also down, at €8.04B ($10.73B USD), slightly below the analyst expectation of €8.12B ($10.83B USD), and down from €10.01B ($13.36B USD).
 

Nokia Lumia 920
 
Nokia's sales of phones were down in almost every region, with the major exception of North America, which saw an incredible 270 percent year-to-year growth.

The new Nokia is much leaner than it once was following a series of layoffs and the leasing of its gleaming Finnish headquarters.  The company made a major shift, announcing that it would be cutting its dividend for the first time since 1989.  While that move may irritate investors, it should boost a now-profitable Nokia's cash-pile, which has dwindled amid the losses.  Last year, despite the losses, Nokia still paid investors a dividend.

CEO Stephen Elop, a former Microsoft Corp. (MSFT) executive acknowledged that Nokia is still "moving through [a] transition," but enthuses, "We are very encouraged that our team’s execution against our business strategy has started to translate into financial results. Most notably we are pleased that Nokia Group reached underlying operating profitability in the fourth quarter and for the full year 2012."

The Nokia recovery is perhaps a hopeful sign for other struggling players like HTC Corp. (TPE:2498) and Research in Motion, Ltd. (TSE:RIM).  But it should by no means be considered the norm; the recovery has come at a tremendous cost as the company has labored to reinvent itself as a smaller, more agile competitor.

One distinct advantage Nokia has over other struggling players its Nokia Siemens Networks joint venture, which sells telecommunications equipment.  The NSN unit has continued to grow in revenue, even as the mobile devices unit has shrunk in revenue.  While smartphones and mobile in general do seem to be turning the corner from a operating cost perspective for Nokia, the profitability was only achieved thanks to a strong performance from NSN.

Source: Nokia [PDF]



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Only 4.4M handsets sold?
By DukeN on 1/24/2013 11:45:01 AM , Rating: -1
This is horrendous.

Their shiny new handsets could only gather 4.4M in sales? Even TurdBerry with their 18 month old models sold 7.5M in the same quarter.

Not a good sign going forward...




RE: Only 4.4M handsets sold?
By Flunk on 1/24/2013 11:49:22 AM , Rating: 2
What was RIM's profit again... Oh wait...

Sales are not the be all and end all of metrics. A lot of companies have gone out of business with great sales figures.


RE: Only 4.4M handsets sold?
By Mitch101 on 1/24/2013 1:00:49 PM , Rating: 2
Not to mention the Nokia 920 was released in November it hasn't been selling for an entire quarter. Its also still being released in other parts of the world still.

41 Megapixel Pureview Nokia Lumia coming
http://wmpoweruser.com/rumour-41-megapixel-purevie...


RE: Only 4.4M handsets sold?
By flubaluba on 1/24/2013 4:33:43 PM , Rating: 2
Actually if you think of it they only started selling in December so the 4.4 million sales is not even two months and they probably had these figures for just before the new year started.So comparing them to someone like rim who are selling in all markets and have phones in most stores and also are selling their old kit at big discount prices I would say Nokia are back on the way up. I know in the UK they are selling like hotcakes and everyone I talk to wants one, they are just that little too expensive at the moment to compete with all the cheaper phones that are very popular at the moment in Europe that America does not get.Just look at the amazing huawei phones the P1 that i tried out was absolutely amazing for the price,even better than the samsung offerings at the same price point.


RE: Only 4.4M handsets sold?
By Mitch101 on 1/24/2013 11:33:36 PM , Rating: 2
Thats true and if they could keep up with manufacturing demand as they have had a few parts supply issues they are correcting. I agree finland, italy, australia etc Windows phone is seeing excellent growth but unless you outsell Apple its somehow a loss? Nokia made profit of a half billion and increased thier cash reserves in the process thats far from fail. Thats exactly what you want a company to do.

Im really happy with the windows phone and sure a lot of people would like me to shut up about it but now there are millions more of me out there and growing. Whats not to like its finally great hardware for a great os.

You got Maps without requiring a constant carrier connection.

Touchscreens that work with gloves.

Device that is nearly indestructable. Those torture tests are pretty amazing your getting quality hardware above and beyond.

Got to be the best camera on any cell phone. Nokia dosnt skimp.

Wirelss charging not sure its necessary but beats bumbling with the cable.

150,000 apps and of all the apps my friends show me on Android or iPhone I have the same apps or ones I think are as good.

Plenty of games are showing up if thats your thing.

If nobody is threatened by Windows phone why do they spend so much time trying to block it. Look at google acting like a baby about Active Sync and trying to block windows phones from youtube thats just going to get them into heavy lawsuits and bring a ton of anti-competitive lawsuits against them. If the base is so bad why do you worry about a few million Windows Phones so badly?


RE: Only 4.4M handsets sold?
By nafhan on 1/24/2013 2:14:35 PM , Rating: 2
The profits on their handsets were not excellent, either. Depending on which numbers you look at (IFRS vs. non-IFRS), their handset division was just better than break even.

In fact, this statement:
quote:
One distinct advantage Nokia has over other struggling players its Nokia Siemens Networks joint venture
Could be rephrased to simply: Nokia has the advantage of a large revenue stream not directly tied to it's handset business.

Anyway, glad to see someone pushing cell phones in a different direction than others. I hope they continue to stay above water.


RE: Only 4.4M handsets sold?
By Zuul on 1/24/2013 11:56:27 AM , Rating: 2
Finally being profitable again is horrendous?

Units sold is a nice metric to know, but overall profitability is more important. Nokia has been trimming the fat to be profitable again - if they can sustain it, then they can work on growth again.

Personally, I'm not 100% sure they are out of the woods yet. The next few quarters will be more of an indicator if the rebuild plan is going to work, or sputter.


RE: Only 4.4M handsets sold?
By DukeN on 1/24/2013 12:24:31 PM , Rating: 2
Here's another take - note the words Outlook Grim that seem to be missing in sentiment from Dailytech's biased take.

http://finance.yahoo.com/news/nokia-beats-outlook-...


RE: Only 4.4M handsets sold?
By Mitch101 on 1/24/2013 1:05:07 PM , Rating: 2
Chinese launch of the Lumia devices for China Mobile is going to give 1Q13 a notable boost.


RE: Only 4.4M handsets sold?
By jimbojimbo on 1/24/2013 1:05:03 PM , Rating: 2
If Nokia cared more about units sold than about profit they wouldn't have signed up for the exclusivity deal with AT&T.


RE: Only 4.4M handsets sold?
By datdamonfoo on 1/24/2013 12:13:22 PM , Rating: 3
You aren't comparing apples to apples. Nokia's total sales for this quarter are in the tens of millions. This is just about one line (the Lumia line).


RE: Only 4.4M handsets sold?
By DukeN on 1/24/2013 12:31:28 PM , Rating: 3
Yes, which is their shiny new set of handhelds and the 'future'.

When your brand new product sucks at selling compared to turds like Blackberry, you're in trouble.


RE: Only 4.4M handsets sold?
By InsGadget on 1/24/2013 2:28:16 PM , Rating: 2
Lumias have done nothing but grow in sales. Expect more of that this year. Blackberries still have decent numbers due to traction with enterprise customers, but they are declining. We'll see if BB10 can change that, but regardless, Lumias are a success so far--not a runaway success, but still doing well enough.


RE: Only 4.4M handsets sold?
By BabelHuber on 1/24/2013 12:13:19 PM , Rating: 2
Nokia sold 28 Million Smartphones in Q4 2010. In Q1 2011, they announced their Windows-Strategy.

Result: In Q4 2012, Nokia sold 6.6 Million Smartphones, 4.4 Million with WP8 and still 2.2 Million Symbian-devices.

Meanwhile, Nokia fired 40,000 employees, closed all European factories, sold their headquarter buildings in Finland and cancelled countless projects.

This is a failure of epic proportions and nothing else.


RE: Only 4.4M handsets sold?
By Mitch101 on 1/24/2013 1:09:24 PM , Rating: 2
Id like to fail to the tune of making a half billion dollars.


RE: Only 4.4M handsets sold?
By BabelHuber on 1/25/2013 2:26:19 AM , Rating: 2
...after waisting tens of Billions in the last 4 quarters, like Nokia? LOL!


RE: Only 4.4M handsets sold?
By Mitch101 on 1/25/2013 9:52:04 AM , Rating: 2
Their cash reserves went up they are financially stronger than they were at the beginning of the year. They are moving product, making money, and with windows phone gaining traction going to do quite well. They have a supply issue but getting that fixed. Plus there are still launches in other areas like china about to occur which is the largest area. Nokia is bound to have dollar signs if they keep it up.


RE: Only 4.4M handsets sold?
By BabelHuber on 1/25/2013 10:59:53 AM , Rating: 2
Nokia burnt Billions of Dollars in 2012 - Q4 is the first quarter where they were a little bit profitable.

And in which parrallel universe is WP gaining traction? Is a market share in the low single digits 'gaining'? For a company like MS?

In 2013 competition will be even tougher: Tizen or Sailfish could very well overtake WP.

So let's see...


RE: Only 4.4M handsets sold?
By Mitch101 on 1/25/2013 1:21:07 PM , Rating: 2
Open up forbes or motley fool once in a while.

Nokia’s Move - Fire On All Cylinders
http://beta.fool.com/jyotiadvisor/2013/01/25/nokia...

CHART OF THE DAY: Apple's Days Of Mega-Growth Are Over
Read more: http://www.businessinsider.com/chart-of-the-day-ap...

Microsoft: Windows Phone Related Revenue Increased $546 Million

Windows Phone breaks 5% market share in Europe, making strong gains in UK and Italy

Huawei has long-term plans for Windows Phone says CEO

Growth is growth even if its slow as long as it makes profits then its not going away.

I should remind people when Android wins so does Microsoft.


RE: Only 4.4M handsets sold?
By InsGadget on 1/24/2013 2:43:09 PM , Rating: 2
Laughable. You don't understand corporations. Like a large ship, big changes in course take a long time to take effect. Did you expect profit immediately from the change to WP? It took months for the first devices to even make it to the market, and months more for Windows Phone 8 and the Lumia 920s to come out. Large changes take time, but Nokia is hitting their projections in growth, and they will continue to do so due to innovations and solid products.

Honestly, everything you listed as a bad thing is actually a good thing for Nokia to become profitable again. Thus the fact that many investment services recommend buying Nokia stock right now.


RE: Only 4.4M handsets sold?
By BabelHuber on 1/25/2013 2:32:00 AM , Rating: 2
You do not get it: In Q4 2010 Nokia was the undisputed market leader with 29% market share in new sales, in Q4 2012 they have crashed down to 3%.

Betting everything on Windows was a moronic strategy, that's why Nokia is failing.

Two years ago Nokia was number 1, they sold more smartphones than Samsung and Apple combined, now they have fallen down to the 10th place.

Only imbeciles can see this as a successful strategy.


RE: Only 4.4M handsets sold?
By zephyrprime on 1/24/2013 12:17:01 PM , Rating: 2
I agree. 4.4M is pretty disappointing. Lumia sales trailed off very quickly last time.


RE: Only 4.4M handsets sold?
By Samus on 1/24/2013 12:46:16 PM , Rating: 2
Still more than Sony sold, and competitive with HTC and LG


RE: Only 4.4M handsets sold?
By txDrum on 1/24/2013 2:16:02 PM , Rating: 2
Were they actually smartphones though? Nokia's phones were probably worth vastly less than they are now, each unit's sales probably net Nokia more money.

Couple that with the fact that Nokia is probably selling more than 8 million a quarter, and Nokia isn't in too terrible shape. Yes they aren't as dominant as they were, but shouldn't that be a resounding "duh"? Afaik, Nokia was starting to lose money before Windows. Their phone is out of date, and getting a new OS helps significantly with addressing that. Yeah - sales were lower, but they're still making profit and Windows Phone 8 and the Lumia 920 are way better than relevant Nokia phones of 2010.


RE: Only 4.4M handsets sold?
By Ushio01 on 1/24/2013 2:30:45 PM , Rating: 2
Nokia sold 6.6 million smartphones and 79.6 million feature phones in Q4 2012 according to their financial statement.


RE: Only 4.4M handsets sold?
By burpnrun on 1/24/2013 2:40:53 PM , Rating: 1
Of the $269 mil in reportd profit, remember that $250 million of that is the quarterly "payment" from Microsoft for "choosing" to make their crappy OS phones. So, a real $19 mil profit, a mere blip which could easily have been a $19 mil loss without accounting manipulation.

And Nokia/Elop readily admits that this (current) quarter, and possibly the next ones, will be worse without the benefit of Xmas sales and hype.

Imagine ... in 18-24 months they went from the #1 manufacturer in the world, to #10 or #11. Good strategy, that, switching to Microsoft-based smartphones!


RE: Only 4.4M handsets sold?
By nikon133 on 1/24/2013 3:25:45 PM , Rating: 2
For phones released only in November, with low availability and frequent out of stock, and no availability in many parts of the world (they were only available in NZ around Christmas, for example), that is not too bad. Hardly stellar, but they might be reaching critical mass where there are just enough phones in the wild to give them steady growth from word-of-mouth advertising.


RE: Only 4.4M handsets sold?
By TakinYourPoints on 1/24/2013 4:28:48 PM , Rating: 3
Dude, this is just a start. What else should Nokia have done, rode Symbian into oblivion?

Their WP devices are really good and WP8 is an OS that deserves to compete, it has an excellent UI (in many ways the best mobile UI out there) and a great SDK. If it gets more customers then lots of high quality apps will follow.


RE: Only 4.4M handsets sold?
By BabelHuber on 1/25/2013 4:24:30 AM , Rating: 2
Nobody is saying it would have been better for Nokia to stick with Symbian.

But Nokia had 2 new smartphone OSes in development:

Meego as the successor to Symbian and Meltemi as the successor to S40 for low-cost smartphones.

The Nokia N9 with Meego was sold in parallel to the first Lumias, but only in 'selected markets' like switzerland or Russia, but not in the US or in the big European markets like Germany, UK and France.

Also, Nokia stated from the very beginning that there will be no successor no matter how it will sell and did not spend any marketing-Dollars, so it was DOA.

The Meltemi developers were all fired last year, just a few months before devices should hit the market.

So instead of betting everything on WP, Nokia could also have relased Meego in parallel to WP and let customers decide.

Or they could have done it like Samsung and HTC, selling Android and WP-devices in parallel.

But they went with Microsoft exclusively, now Nokia is Micro and Soft. Well done!


RE: Only 4.4M handsets sold?
By fteoath64 on 1/25/2013 4:27:42 AM , Rating: 2
No. Nokia should have gone Android 3 years ago and today they would be sharing top spot with Samsung!. But still a good enough comeback regardless of WP setback. Now they can use their hardware prowess to make 20 to 30 models of phones with all shapes and sizes. They cannot just follow the single slab design approach. Got do it. Also, do a decent 8 inch tablet with RT or WP if they dare!


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