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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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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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