Wednesday, April 18, 2012

Nokia Sees Increasing Challenges as Revenue Falls 29%

Citing fierce competitive pressure, Nokia reported Q1 2012 revenue of EUR 7.354 billion, down 29% from the EUR 10.399 billion a year ago, and down 26% from the preceding quarter. Nokia reported an operating loss of EUR 1.340 billion for the quarter, compared to a loss of EUR 954 million in Q4 2011. The company has net cash of EUR 4.872 billion remaining on its balance sheet, compared to EUR 6.372 billion a year ago.

"We are navigating through a significant company transition in an industry environment that continues to evolve and shift quickly. Over the last year we have made progress on our new strategy, but we have faced greater than expected competitive challenges. We have launched four Lumia devices ahead of schedule to encouraging awards and popular acclaim. The actual sales results have been mixed. We exceeded expectations in markets including the United States, but establishing momentum in certain markets including the UK has been more challenging," stated Stephen Elop, Nokia CEO.

Some notes:

In China, Nokia's mobile device shipments by volume plunged by 62% compared to a year earlier. In North America, the drop was 50% and in Europe the loss was 32%.

Looking ahead, Nokia expects its non-IFRS Devices & Services operating margin in the second quarter 2012 to be similar to or below the first quarter 2012 level of negative 3.0%.

The company also noted that during Q1 received a quarterly platform support payment of USD 250 million (approximately EUR 189 million).

Nokia Siemens Networks completed the acquisition of Motorola Solutions' networks assets on April 30, 2011. Accordingly, the results of Nokia Siemens Networks for the first quarter 2012 are not directly comparable to its results for the first quarter 2011.

Nokia Siemens Networks reported net sales of EUR 2.947 for Q1 2012, compared with EUR 3.815 billion in Q4 2011.

The year-on-year decrease in Nokia Siemens Networks' net sales in the first quarter 2012 was driven primarily by a decline in sales of infrastructure equipment, which more than offset a slight increase in sales of services. The sequential decline in Nokia Siemens Networks' net sales in the first quarter 2012 was driven primarily by industry seasonality.