Nokia

Handset maker Nokia continues to report losses: a net loss of €115 million ($150.7 million) for the quarter ending June 30, 2013. This is however a significant improvement from €824 million ($1.08 billion) loss reported in the same quarter last year.

The net sales declined 24% year on year (YoY) to €5.69 billion ($7.47 billion) for the quarter, down from €7.5 billion ($9.85 billion) in the same quarter last year. Asia Pacific region accounted for €1.4 billion ($1.84 billion) sales revenue for the quarter, down 26% from €1.98 billion ($2.6 billion) from Q2 2012.

Operating Highlights

– Nokia has shipped 7.4 million Lumia smartphones during the quarter, up 32% quarter on quarter (QoQ). The company noted that Windows Phone 8-based Lumia products accounted for a significant majority of its Smart Devices volumes.

– Nokia has shipped 4.3 million Asha full touch smartphones during the quarter, down 14% QoQ.

– Nokia announced and started shipping Nokia Asha 501, the first device to run on the new Asha platform. It also started shipping Nokia 105, Nokia’s most affordable phone in its portfolio.

– Nokia started shipping Windows Phone 8-based Nokia Lumia 520 and Nokia Lumia 720 in significant volume.

– Nokia announced Nokia Lumia 925, a high end Lumia smartphone with Pureview imaging technology and started shipping the device in select markets. It also announced Windows Phone-based Nokia Lumia 928 smartphone on Verizon Wireless.

– Nokia has partnered with WhatsApp to launch Nokia Asha 2010 with a dedicated WhatsApp button and a free lifetime WhatsApp subscription. It has also inked a tie-up with Hike to preload the app on Lumia 510, Lumia 720 and all its Nokia Asha Full Touch phones to be sold in India.

– Nokia has partnered with the Delhi based classifieds business Getit to feature premium listings from the service on its local search service Nokia Nearby. It has also launched a Chat Buddy campaign on Nimbuzz.

– Nokia recently extended Mail For Exchange app for all Nokia Asha touch screen phones in India. Last week, it also started preloading its free music streaming service Mix Radio with Nokia Music to select Asha smartphones including Nokia Asha 305, 308, 310 and 311.

– HERE has expanded the number of buildings for which it provides venue maps to 49,000 buildings. The company recently extended venue maps to India.

– HERE has released updated aerial imagery on here.com and claims to provide aerial imagery for 14 million square kilometers. It has also updated Street maps for Windows Phone 8 and here.com.

– Earlier this month, Nokia acquired Siemens’ 50% stake in their joint venture Nokia Siemens Networks for €1.7 billion ($2.23 billion) and the transaction is expected to close in Q3 2013. Nokia will be paying Siemens €1.2 billion ($1.57 billion) in cash at the closing of the transaction and the remaining €500 million ($656.8 million) in form of secured loan due one year from closing. Following this transaction, Nokia Siemens Networks will become a fully owned subsidiary of Nokia.

– Nokia has started production at its new manufacturing facility in Hanoi, Vietnam which will produce Asha smartphones and the company’s feature phones.

– Nokia has signed up Miele & Cie. KG which is apparently switching to Nokia Lumia as the smartphone for its global employees.

– U.S. Federal Highway Administration will use HERE platform’s traffic service to develop performance measures. TRANSCOM will be using HERE Traffic to support 16 government agencies with real-time traffic data in New York, New Jersey and Connecticut. Commercial truck routing software company Rand McNally has also chosen HERE as its preferred map provider.

– Several automobile companies have chosen HERE as its partner for Map Updates. This includes Renault (India & Russia), Mitsubishi (Australia & North America), Honda (Malaysia & Russia), Hyundai in 15 EU countries, Nissan Australia, Opel Russia and Toyota (Argentina & Brazil) among others. Ford also uses HERE Traffic in Germany.

– Online people search platform Spokeo has inked tie-up with HERE for maps, satellite imagery and geocoding for North America region. SAP will be using HERE’s location technology for its TwoGo car-sharing service.

Payment from Microsoft: For the quarter, Nokia received a quarterly platform support payment of $250 million (€192 million) from Microsoft. This is the same amount that it had received in earlier tranches. The company said that it has a competitive software royalty structure, which includes minimum software royalty commitments that varies over the agreement life and is paid on a quarterly basis. Over the life of the agreement, both the platform support payments and the minimum software royalty commitments is expected to slightly exceed the total amount of the minimum software royalty commitments.

Financials

Devices and Services Segment: Nokia’s devices and services segment business accounted for €2.7 billion ($3.54 billion) revenue of the company’s net sales for the quarter, down 32% YoY from €4.02 ($5.28 billion) billion revenue. The segment reported operating loss of €33 million ($43.35 million), a significant improvement from €473 million ($621 million) operating loss in Q2 2012. Asia Pacific region accounted for €683 million ($897 million) revenue of the segment’s total revenue, reporting a 28% decline from €948 million ($1.24 billion) revenue reported in the same quarter last year.

Mobile Device Sales

Smartphone sales decreased by 24% YoY to €1.16 billion ($1.52 billion) for the quarter while Mobile Phones sales declined by 39% YoY to €1.41 billion ($1.85 billion) for the quarter.

In terms of volume, Smartphone sales declined by 27% YoY to 7.4 million units while mobile phones sales declined by 27% YoY to 53.7 million units. Overall, the mobile device sales declined by 27% YoY to 61.1 million units. Asia Pacific still accounts for the highest mobile device sales volume, accounting for 20.2 million of the total mobile device sales for the quarter, registering a 29% decline YoY.

Mobile Device Volume

The company attributed the decline in sales to lower sales in its mobile phones business unit, where it is apparently facing intense competition at increasingly lower price points. The company noted that it saw lower sales in devices priced above €30, which was partially offset by devices priced below €30.

The decline in smartphone sales was due to lower Symbian volumes which was partially offset by higher Lumia volumes. The company notes that the Symbian volumes have now dropped to approximately zero from 6 million in Q2 2012.

The average selling price of smartphones increased by 4% YoY to €157 ($205.8) for the quarter while the average selling price of mobile phones decreased by 16% YoY to €26 ($34.1). Overall, the average selling price decreased by 6% YoY to €45 ($59) for the quarter.

HERE segment (previously Location and Commerce): Nokia’s HERE segment accounted for €233 million ($305.4 million) of the company’s net sales for the quarter, down 18% YoY from €283 million sales in Q2 2012. The segment reported increased operating loss of €89 million ($116.67 million), from €95 million ($124.53 million) loss in the same quarter last year.

DownloadNokia Q2 2013 Report