Nokia posts poor financial results

FINNISH PHONE MAKER Nokia posted a dismal set of financial results underlining the firm's recently rather sorry state of affairs.

Once regarded as the darling of the mobile telecommunications world, Nokia has found itself working hard just to tread water. The company posted an astonishing 40 per cent drop in quarterly operating profits for the second quarter of 2010 to €240 million (£200 million). Whereever you look, it's been bad news lately for the outfit.

Nokia's navigation arm, Navteq, which it bought in 2007 for over £5 billion, managed to perform as expected by posting a loss, managing to lose €81 million (£68 million). But never mind, it still did better than a year ago, when it posted a €100 million (£84.5 million) loss.

The results were so poor that one really has to employ a creative approach in interpreting the figures for a positive angle. Nokia might point to the fact that it shifted more handsets than before, but a two percent rise over the typically poor sales period after Christmas is hardly something to get excited about.

You know things are bad for a firm when its CEO, Olli-Pekka Kallasvuo, comments on his firm's performance by praising the market's growth, saying, "the global handset market has continued to grow at a healthy pace." The only problem for Kallasvuo is that while the market might be growing at a healthy pace, Nokia's sales aren't.

There have been repeated calls for Kallasvuo to hit the road, which led the embattled CEO to plead for an end to the tittle-tattle. "There has been a lot of speculation on my position, on myself, during the last couple of weeks and that is not good for Nokia and must be brought to an end one way or another," he said.

Nokia's joint venture with Siemens is looking shaky too, with the business unit still posting massive losses. This has led to rumours of a split, despite the two firms having shelled out over $1 billion (£650 million) on Motorola's telecoms infrastructure business a few days ago.

The Wall Street Journal is reporting that Siemens wants out and is considering selling its stake in the joint venture, known as Nokia Siemens Networks (NSN). But it seems that Siemens is in a race, with Nokia wanting to dump its share of NSN as well. Apparently the size of the operation, less than effective management and an inability to compete with low cost Chinese firms are all reasons for both partners' dissatisfaction.

Nokia might remain the top handset manufacturer for the moment but it's clear to see that its inability to move with the times has led to the decline of its mobile handset business and just about everything else. µ