After reporting profit in the previous quarter, Nokia is back in the red – it has reported a loss of €150 million ($196 million) for the quarter ending March 31, 2013. Here are some notes from Nokia’s Investor conference call:
– Lumia is out-shipping the iPhone in countries like India, Argentina, Poland, Ukraine and Finland.
– In Q1 2013, Nokia shipped 5.6 million Lumia smartphones, up 27% quarter-on-quarter (QoQ). Around two-thirds of these shipments were Windows Phone 8 based devices.
– Smart devices net sales decreased 5% sequentially as higher Lumia net sales were more than offset by the decline in Symbian volumes.
– Nokia sold only 0.5 million Symbian handsets this quarter.
Smartphone Plans: Nokia CEO Stephen Elop notes that the company has received positive response on lower price point Lumia such as the Lumia 520 in India. Nokia had to supply more Lumia stock in the country in France. Elop expects the Lumia volumes to continue to grow at 27% rate or higher, during Q2.
Elop noted that Nokia is focused on price competitiveness for its mobile phone products, and in the next quarter, will increase its marketing efforts for certain mobile phones. Nokia and Microsoft will work on marketing campaigns, training more retail associates, and improving operator marketing. In the next quarter, Nokia is going to work with operators to secure a hero status with them in the US for one of its Lumia handset. Securing a hero status means getting a top spot at the point of sale, which attracts maximum subsidies and additional marketing investment.
We believe he is indicating at the Nokia Lumia 928 with Verizon network. Nokia had previous signed similar deal with AT&T for its Lumia 920 handset.
Mobile Phones Volumes Decline:
- Mobile phones volumes decreased by 30% QoQ to 55.8 million units in Q1 2013. In it’s last earning call, Elop had indicated a weak quarter for mobile phones sales. The company attributed the decline in mobile phone business to competition from other low cost mobile phone makers. Nokia also noted that the decline in volume was across mobile phones portfolio, most notably lower sales of its sub 30-year-old mobile phones.
- Asha series refresh: Nokia has sold 5 million Asha full touch smartphones during the quarter, registering a 46% decline QoQ. Elop noted that Asha full touch smartphone series is currently into its 9 month, and that they would soon be refreshing the product line.
Tax Situation in India
Recently, Nokia had received a tax claim of €225 million ($294 million) plus applicable Interest from Indian tax authorities and it reiterated its position that the company operations are in compliance with local laws as well as the bilaterally negotiated tax treaty between the Governments of India and Finland. Nokia claims that it will defend vigorously against the claim.
HERE segment (previously Location and Commerce)
Nokia reported that the HERE segment accounted for €216 million ($282.25 million) of the company’s net sales for the quarter, down 22% YoY from €278 million ($363.3 million) sales in Q1 2012. The segment reported increased operating loss of €97 million ($126.75 million), from €94 million ($122.83 million) loss in the same quarter last year. Ihamuotila accounted the decline to lower internal and external net sales that reflect lower sales that were driven by seasonally lower sales to personal navigation and vehicle customers.
Ihamuotila mentioned that the Devices & Services and Corporate Common had approximately 31,600 employees, a reduction of approximately 15,500 compared to the year ago quarter and approximately 1,600 compared to Q4. NSN had approximately 56,700 employees, a reduction of approximately 11,900, compared to the year ago quarter and approximately 1,700 compared to Q4.
Elop said that consumers are increasingly discerning about the capabilities and new experiences that attract their attention and that they are less interested in counting cores and pixel density, and more interested in experiences that are truly innovative. He also noted that unbranded Android and forked Android players are continuing to emerge from China and India creating new dynamics both within and increasingly outside of Asia. With this growth in low-priced fragmented versions of Android the Android experience is becoming inconsistent across the lower-end price range.
– Nokia Q1-2013: EUR 196M Operating Loss; 61.9M Devices Sold, 5.6M Lumia
– Nokia Q4-2012: EUR 439M Operating Profit; 86M Devices Sold, 9.3M Asha
– Nokia Q3-2012: Net Loss At EUR 576M; Overall Handset Sales Down 34% YoY
– Nokia Q2-2012 Concall: On Windows Phone 8, Location Services & Lumia Devices
– Nokia Net Loss At EUR 1.34B; Overall Handset Sales Down 40% YoY