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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 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?


"Mac OS X is like living in a farmhouse in the country with no locks, and Windows is living in a house with bars on the windows in the bad part of town." -- Charlie Miller














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