Nokia continues to report losses in quarter ended 30th September 2011. The company reported net sales of EUR 8.980 billion for the quarter, down 13% year-on-year and 3% sequentially, and its operating losses were at EUR 71 million in contrast to operating profits of EUR 403 million, that it registered in Q3-2010.
Nokia CEO, Stephen Elop says that he was encouraged by the progress that the company made in Q3 and coninued to take decisions related to structural changes required for Nokia’s long-term success. He said that the Q3 results indicate that Nokia’s sales execution and channel inventory situation have improved. He added that the first Windows devices will be launched in select markets later in the quarter and subsequently in other markets by next year.
The devices and services segment business of handset major Nokia contributed EUR 5.3 billion to net sales for the quarter ending September 30th 2011, down 25% year-on-year and 1% sequentially. The segment reported operating profits of EUR 132 million compared to operating profits of EUR 807 million that the company reported in the same quarter, last year. Smartphone sales decreased by 39% Year on Year and 7% Quarter on quarter, while mobile phone sales (other than smart phones) witnessed a decline of 14% YoY and an increase of 14% QoQ. Gross margin for the devices and services segment declined to 2.4%, from 11.3% in Q3-2010. IPR Royalties were also included in the net sales under this segment, which contributed EUR 70 million.
Devices & Services
– Device Sales: Effective April 1,2011, Devices & Services business includes two new operating and reportable segments – Smart Devices, which focuses on smartphones, and Mobile Phones, which focuses on mass market mobile devices – as well as Devices & Services Other. Device sales for Nokia were down 3% year-on-year and up 20% sequentially, at 88.5 million units.
In terms of volumes, Smart phone sales have declined 38% YoY and increased 1% QoQ to 16.8 million units, in the quarter. Mobile phones/feature phone sales have increased 8% YoY and % QoQ to 89.8 million units. It shipped 18 million dual-SIM devices.
Nokia’s market share in the Smartphone market has declined significantly, leading to the decline in over all net sales, however, it was offset by increase in its feature phone volumes. Nokia blamed strategies of competitors and decrease in the average selling price of its devices for the loss.
– Nokia’s overall Average Selling Price (including services revenue) decreased to EUR 51 from EUR 65 in Q3-2010 , however, the ASP was EUR 62 in the previous quarter. ASP for Smart phones was EUR 131 and for feature phones was EUR 32.
– Nokia’s Map solutions company, NAVTEQ‘s net sales declined 4% YoY and 2% QoQ at EUR 241 million. Nokia had announced plans to create a new Location & Commerce business which will combine NAVTEQ and Nokia’s social location services operations from Devices & Services. The Location & Commerce business will be an operating and reportable segment beginning October 1, 2011. In addition to a portfolio of products and services for the ‘wider internet ecosystem’, the Location & Commerce business will create integrated social location offerings for Nokia smartphones, including Nokia products with Windows Phone.
– According to CEO Stephen Elop, Nokia gained marketshare in India with its dual-SIM feature phones and was able to have an effect on the sales of smaller Chinese and local manufacturers.
Nokia continues to target Nokia Group net cash and other liquid assets at the end of 2011 to be above the EUR 3.9 billion balance at the end of the third quarter 2011. Nokia expects its non-IFRS Devices & Services operating margin in the fourth quarter 2011 to be between 1% and 5%. slightly above breakeven, ranging either above or below this level by approximately 2 percentage points.