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Nokia posts $97.5m loss for Q3

Stephen Elop continues to take tough decisions in a bid to revive Nokia's fortunes

Nokia has posted a $97.5m (€71m) operating loss for the third quarter of 2011, a sharp fall from the €403m profit the firm recorded in the same period of 2010. Nokia’s net sales decreased 13 per cent to €8,980m, €1,290m down from the €10,270 it amassed in the same period last year.

Net sales of smart devices decreased 39 per cent to €2,206m and net sales of mobile phones decreased 14 per cent to €2,903m. Net sales of the total devices and services business decreased 25 per cent to €5,392m from €7,173m in 3Q10.

Meanwhile, net sales of subsidiary Nokia Siemens Networks increased 16 per cent to €3,413m, up from the €2,943m from the same period last year. The unit posted a €114m operating loss for the quarter, although this was an improvement on the €282m it posted in 3Q10.

Despite the results, CEO Stephen Elop, said that the firm’s sales execution and channel inventory situation had improved.

“I am encouraged by the progress we made during Q3, while noting that there are still many important steps ahead in our journey of transformation,” he said. “With each step, you will see us methodically implement our strategy, pursuing steady improvement through a period that has known transition risks, while also dealing with the various unexpected ups and downs that typify the dynamic nature of our industry.”

He added that during the third quarter, Nokia continued to take action to drive the structural changes required for the firm’s long-term success.

“From a product standpoint, our overall mobile phones portfolio performed well.  We shipped approximately 18 million dual SIM devices in Q3, and in markets such as India where dual SIM is pervasive, we gained market share.”

He added that he was also encouraged by the company’s progress with the first Nokia Windows Phone, which will be launched in certain markets later this quarter,  and will be rolled out to more markets throughout 2012.

“To position Nokia for the future, we are driving fundamental changes in how we operate,” said Elop. “In summary, in Q3 we started to see signs of early improvement in many areas, but we must continue to focus on consistent progress so that we can move Nokia through the transformation and deliver superior results to our shareholders.”

Malik Saadi, principal analyst at Informa Telecoms & Media, agreed with Elop, and said that although the results look bad, they were actually better than expected.

“No one was expecting to see Nokia post a profit, in fact everyone was expecting to see much worse from the results,” he said. “The company is putting into place a new strategy and it cannot implement radical changes and see an improvement to finances in just a few months.”

He added that the company’s smartphone offering is showing signs of encouragement, with 16.8 million smart devices shipped during the quarter, up from the 16.7 million sold in Q2, making up 38 per cent of total devices shipped. Apple, in contrast, has seen the number of its iPhones shipped in the quarter fall since Q2.

“Nokia’s smart devices aren’t performing badly, especially when you consider that they are built on an ageing platform; Symbian,” said Saadi, “”Everyone was expecting Symbian to fail and for shipments to decline, but they have seen a lot of demand in Eastern Europe, India and Latin America.”

And while Nokia begins to shift its focus to Windows Phone 7 handsets, Saadi warned not to expect immediate results, as the firm is planning to launch the first handset in only a small number of markets in 2011, excluding the US.

“The company is launching Windows Phone 7 handsets in a few markets because it wants to focus very clearly on it before rolling it out to more markets. We shouldn’t expect spectacular growth to the company’s smartphone shipments this year, the impact will be seen 1Q11.”

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