Nokia Loss Widens, Future Hinges on New Launch

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on Oct 22, 2012

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Nokia Loss Widens, Future Hinges on New Launch

**Nokia Reports Sixth Straight Quarterly Loss**

Nokia (NYSE:NOK, HEL:NOK1V), once the world’s biggest mobile phone maker, posted a sixth successive quarterly loss for the three months to September during which the company lost €969 million (£786 million) — an amount 14 times wider than in the same period last year, The Times reported on 19 October 2012.
Nokia’s sales in the third quarter of the year went down by 19 per cent to €7.2 billion (£5.8 billion). The Finnish company shipped only 6.3 million smartphones, compared to almost 17 million a year earlier. Sales of Nokia’s lower-cost phones, including the new Asha brand, proved more resilient at 77 million. This, however, was down from 90 million last year. The phone maker also reported a 78 per cent decrease in revenue in China, where volumes hit their lowest level since the second quarter of 2004. On the key North American market, Nokia phone sales more than halved.

The company’s cash balance, a key concern for investors, also shrunk — from €4.2 billion (£3.4 billion) to €3.6 billion (£2.9 billion). The results, however, were better than analysts’ estimates, which gave a slight boost to the company’s shares on Thursday. In Helsinki, Nokia’s stock was 10 per cent higher at one point, but then it closed only 2 cents up at €2.22.

**Nokia Struggles to Keep Pace with Apple**
!m[After £786m Quarterly Loss, Nokia Hopes to Win Back Market Share with New Lumia Sales](/uploads/story/609/thumbs/pic1_inline.png)In the third quarter of the year, Nokia managed to sell just 2.9 million Lumia smartphones compared to Apple’s (NASDAQ:AAPL) sale of 5 million iPhone 5 handsets only in the three days after it was launched. This has once again highlighted that the Finnish company is struggling in the competition with the current mobile market leaders.

Nokia dominated the international mobile industry for more than a decade but has of late lagged behind the likes of Apple and other rapidly growing smartphone makers, such as Samsung (KRX:005930). Since the iPhone was introduced in 2007, Nokia has lost almost 90 per cent of its stock market value. The Finnish company’s current chief executive Stephen Elop took the helm of the troubled company in 2010 and phased out the Symbian operating system for Nokia’s smartphones in favour of a partnership with Microsoft. The result was the Lumia range of phones, which now seem to be the company’s last hope to regain its leading position in the mobile industry.

**Lumia Make-or-Break Launch**
Nokia is now pinning its hopes on new, top-of-the-range Lumia 820 and 920 phones, which will use Microsoft’s latest Windows 8 software and are due to hit stores in early November. With their launch, Nokia plans to expand its line-up of Lumia smartphones to cover the complete range of buyers. According to CEO Elop, the new Lumia will give retailers, including mobile phone network operators, a solid alternative to Apple’s iPhone and Google’s Android phones, such as Samsung.
“Next year is going to be a very interesting year,” Elop told The New York Times. “A number of operators around the world are increasingly frustrated with the two strong ecosystems in their shops today. As they see a full portfolio of products with Lumia from Nokia, this will represent for them a credible third alternative.”
Sales in the pre-holiday season may determine Nokia’s chances of long-term survival in the mobile handsets market. Yet, according to analysts and investors, if Lumia sales fail to shine in the next few months and Nokia’s cash position worsens, the company may need to change its strategy, as well as its chief executive.