THERE'S NO WAY to sugarcoat it, Nokia suffered a terrible last quarter of 2010, with profits falling by 23 per cent.
Nokia posted profits of €884 million for the last three months of 2010, down from €1,141 million in the same quarter of 2009. Breaking that figure down, Nokia suffered a 16 per cent drop in earnings from devices and services to €1,018 million, though the worst performance came from the firm's infrastructure division, Nokia Siemens Networks, which saw its profits drop by a staggering 94 per cent to just €1 million.
However it's Nokia's flagging performance in mobile phone sales that will most worry the firm. Although its revenue increased by 4 per cent to €8.5 billion, adjusting for inflation results in stagnant sales figures. To further rub salt in Nokia's wounds, the company's operating margins are falling, meaning it is making less profit on every handset it sells.
Nokia didn't even try to hide the terrible performance, clearly stating that by its own estimates its 2010 market share fell to 32 per cent from 34 per cent in 2009. Yet despite the negative figures, Nokia's CEO Stephen Elop seems to think everything is chugging along just fine.
In a statement accompanying the financial results, Elop said, "In Q4 we delivered solid performance across all three of our businesses, and generated outstanding cash flow. Additionally, growth trends in the mobile devices market continue to be encouraging. Yet, Nokia faces some significant challenges in our competitiveness and our execution. In short, the industry changed, and now it's time for Nokia to change faster."
The three businesses Elop was referring to include the 16 per cent drop in profits in devices and services and Nokia Siemens Networks, which posted that shocking 94 per cent drop in profits. The only good piece of news, if it can be called that, is Navteq's narrowing losses, which now stand at €19 million for the last quarter of 2010. That's hardly a "solid performance" by any stretch of the imagination.
Those significant challenges that Nokia faces come in the form of Apple's Iphone and Android smartphones. While Nokia has continued to fiddle with Symbian, an older operating system that is clearly not up to the job of competing with Apple's IOS and Google's Android, its market share and consequently, its profitability, are taking a beating.
While Elop's claim that Nokia delivered a solid performance in the last quarter is questionable, he's bang on the money to be urging his company to change faster. Thanks to alternatives, the world simply will not wait very long for Nokia to get its act together, as these latest financial figures show.
Nokia must look towards next month's Mobile World Congress to show off some devices that can sell on their features rather than relying on Nokia's rapidly fading brand, because - based upon the firm's most recent financial results - that simply isn't working. µ
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