Nokia reports a €954m loss for the fourth quarter

FINNISH PHONE MAKER Nokia reported a €954m year on year loss for the quarter ended 30 December 2011, only slightly offset by its launch of Lumia Windows Phone smartphones.

The firm shipped 113.5 million mobile phones during the quarter, down eight per cent from the same period in 2010. However, the figures were up from the 106.6 million units shipped in the third quarter of 2011, as the company benefited from its launch of the Lumia 800 smartphone in October, its first Windows Phone handset since it announced its deal with Microsoft.

Nokia shipped 19.6 million smartphones during the final quarter of 2011, down from the 28.6 million it shipped a year earlier, but up 17 per cent from the 16.8 million sold in the third quarter of 2011.

The company reported net sales of €10bn for the quarter, 20 per cent down from the same quarter a year earlier. Full year sales were €38.7bn, a nine per cent decline from 2010.

Nokia reported that it sold one million of its Lumia smartphones since they went on sale in October. The firm said it is accelerating investment in its Lumia range of devices running Microsoft Windows Phone, claiming it has sold "well over one million Lumia devices to date".

Nokia CEO Stephen Elop said, "Just six months after signing an agreement with Microsoft, we introduced our first two devices based on the Windows Phones platform - the Nokia Lumia 800 and the Nokia Lumia 710. We brought the new devices to market ahead of schedule, demonstrating that we are changing the clock speed of Nokia. To date, we have introduced Lumia to consumers in Europe, Hong Kong, India, Russia, Singapore, South Korea and Taiwan.

"In the war of ecosystems, clearly there are some strong contenders already on the field. And with Lumia, we have demonstrated that we belong on the field. Our specific intent has been to establish a beachhead in this war of ecosystems, and country by country that is what we are now accomplishing. To date we have sold well over one million Lumia devices. From this beachhead of more than one million Lumia devices, you will see us push forward with the sales, marketing and successive product introductions necessary to be successful."

Elop admitted that "while we progressed in the right direction in 2011, we still have a tremendous amount to accomplish in 2012", adding that "thus, it is my assessment that we are in the heart of our transition".

He said that pressure in the low cost smartphone market means that Nokia will sell fewer Symbian devices than previously anticipated. He said, "Specifically, changing market conditions are putting increased pressure on Symbian. In certain markets, there has been an acceleration of the anticipated trend towards lower-priced smartphones with specifications that are different from Symbian's traditional strengths.

"As a result of the changing market conditions, combined with our increased focus on Lumia, we now believe that we will sell fewer Symbian devices than we previously anticipated."

The company is also looking to add location based services to its Windows Phone operating system following its creation of a Location & Commerce business, as well as on other Microsoft products such as the US company's internet search engine, Bing.

Elop added, "In summary, with a strong balance sheet, our performance in mobile phones and the new excitement around Lumia, we are confident that we are on the right track to build long-term value."

Nokia also revealed that its broad strategic agreement with Microsoft includes what it called platform support payments from Microsoft, as well as software royalty payments from Nokia to Microsoft.

The company said that in the fourth quarter or 2011 it received the first quarterly platform support payment of €180m.

Nokia added, "We have a competitive software royalty structure, which includes minimum software royalty commitments. Over the life of the agreement, both the platform support payments and the minimum software royalty commitments are expected to measure in the billions of US dollars." µ