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Last updated: July 18, 2013 11:58 am
Nokia has reported its lowest level of quarterly mobile phone sales for eight years as shipments of its smartphones and basic devices continued to disappoint – further demonstrating the Finnish group’s decline.
It missed analysts’ expectations for top-end smartphone shipments as well as more basic mobile phones, sending its shares down 2.8 per cent to €3.01 on Thursday.
Nokia sold 61.1m mobiles in the second quarter, down 27 per cent on a year previously and below analysts’ average forecast of 63.5m. This was the lowest quarterly figure since it sold 60.8m mobiles in the second quarter of 2005 – a year when total global mobile shipments were just 40 per cent of their current level.
The Finnish group had been counting on sales of its basic mobile phones as it struggled to establish its Lumia smartphones, which run on Microsoft’s Windows Phone operating system, as a viable rival to Apple’s iPhone and models using Google’s Android.
Nokia said that it sold a record number of Lumias in the second quarter – 7.4m – but that still dashed analysts’ expectations of 8.1m sales of smartphones.
Windows Phone was the third-largest operating system in the first quarter with a global market share of 3.2 per cent, according to IDC, well behind the combined 92.3 per cent for Android and Apple.
But under pressure from cheap Android devices in emerging markets, shipments of Nokia’s basic mobile phones have collapsed with sales of 53.7m in the quarter, down from 73.5m a year earlier.
Stephen Elop, Nokia’s chief executive, said the company would cut up to 440 jobs to improve the competitiveness of its mobile business. He also took the unusual step of issuing specific guidance for mobile sales in the current quarter, saying they would increase from the second quarter. “We are clearly focused on improving the situation in mobile phones,” he added.
The fall in shipments led to a 24 per cent drop in revenues from a year earlier, to €5.7bn – Nokia’s weakest quarter for revenues in at least 13 years.
Mobile sales overshadowed better than expected profitability at the company as a whole, driven by another strong performance from its telecoms equipment joint venture, Nokia Siemens Networks (NSN).
The Finnish group is paying Siemens €1.7bn to take full control of NSN, which contributed €328m in underlying operating profits to a group total of €303m and has now become the biggest division in terms of sales, as well.
Mr Elop, however, insisted that he was committed to the strategy of investing in Nokia’s core handsets divisions rather than becoming a pure networks business. Its handsets unit made an underlying loss of €32m, down from a profit of €4m in the first quarter, and the company said it expected a further loss in the current quarter.
Nokia’s net cash position declined less than expected from €4.5bn in the first quarter to €4.1bn – but will fall more later in the year when the NSN acquisition is paid for.
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