NokiaNokia registered an operating profit of €118 this quarter as opposed to loss of €564 in the last quarter a year-ago. It is also a big leap from the €115 million loss in the last quarter. The cost of running Devices and Services part of Nokia has been reduced by €3 billion annually. At the end of Q3, Devices & Services and Corporate Common had approximately 32,200 employees, a reduction of approximately 6,100 compared to Q3-FY12, and an increase of approximately 800 compared to Q2-FY13. More on the financials below

Device sales
Smart devices volumes have increased by 40% in a year to 8.8 million this quarter, up from 6.3 in same quarter a year-ago. It has also increased by 19% from the previous quarter. The year-on-year increase in smartphone volumes in the Q3-FY13 was primarily due to higher Lumia volumes, partially offset by lower Symbian volumes. Symbian volumes decreased from 3.5 million units in the Q3-FY12 to approximately zero in the Q3-FY13. Our Lumia volumes increased from 2.9 million in the Q3-FY12 to 8.8 million in the Q3-FY13. The increase in smart devices volumes in this quarter was primarily due to the Lumia 520 sales.

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During the quarter Nokia shipped 55.8 million mobile phones, of which 5.9 million were Asha full-touch smartphones. On a year-on-year basis, Nokia’s mobile phone volumes in were negatively affected by competitive industry dynamics, including intense competition at the low end of product portfolio and intense smartphone competition at increasingly lower price points.

Average selling price (ASP) for Nokia’s smart devices was at €143 in the quarter, a 7% decrease from the same time a year-ago, when it was €155. Nokia has launched several new devices this quarter such as Lumia 1020, Lumia 625, apart from those announced at Nokia World in Abu Dhabi a few days back. Nokia will be bringing its first tablet, Lumia 2420, to the market this quarter and two large-screen Lumia smartphones — Lumia 1520 and 1320.

Financials

– Net sales down from €7.2 billion in Q3 last year to 5.7 billion this year.

– Operating profits (non-IFRS) up from €90 million in Q3-FY12 to €215 million in Q3-FY13.

– Net cash and other liquid assets down from €3.6 billion in Q3-FY12 to €2.4 billion in this quarter of which, Nokia Solutions and Networks contribution was €1.5 billion.

– Smart devices net sales up from 976 million in Q3-FY12 to €1.3 billion in Q3-FY13 thanks to an increase in devices sold from 6.3 million to 8.8 million for the same period respectively.

– Operating profit for HERE category up from a loss of €56 million in Q3-FY12 to a profit of €14 million in Q3-FY13.

– Nokia Solutions and Networks operating profits down from €183 million in Q3-FY12 to €166 million in Q3-FY13.

What happen to Chennai plant?

Nokia’s new manufacturing facility in Hanoi, Vietnam, became fully operational in Q3. The new site has been established to produce our most affordable Asha smartphones and feature phones. These devices were earlier being manufactured in Chennai and at its peak, the Chennai plant manufactured around 200 million phones a year.

Nokia’s caught up in a few legal hassles in India, which might explain their motive to shift some of their operations out of the country. The plant in Vietnam will take over some of the work done by the plant in India, however it is not clear how much downsizing will happen in the Chennai plant as a result of this move.

Nokia and self driving cars

Nokia has tied up with Mercedes-Benz to jointly develop smartmaps based on HERE for connected cars and ultimately, self-driving cars that will leverage cloud technology. Google has already demoed their own version of a smartcar and now most car manufacturers are running to mapping companies such as Nokia to power their own efforts. TripAdvisor, also selected the HERE Platform for geocoding services to offer global coverage for consumers to plan trips.

The HERE segment will become an important segment in Nokia after the acquisition of devices and services segment by Microsoft. On September 3, 2013, Nokia had announced that it had signed an agreement to enter into a transaction whereby Nokia will sell substantially all of its Devices & Services business and license its patents to Microsoft for €5.44 billion in cash. The transaction is expected to close in the first quarter of 2014, subject to approval by Nokia shareholders, regulatory approvals and other customary closing conditions. After this deal goes through, Microsoft will become a strategic licensee of the HERE platform, and will separately pay Nokia for a four year license. This revenue stream is expected to substantially replace the revenue stream HERE is currently receiving from Nokia’s Devices & Services business internally. If the transaction closes Microsoft is expected to become one of the top three customers of HERE.