Nokia reported third-quarter results ahead of expectations. The company's net loss, largely due to one-time costs for winding down its Symbian operations and integrating acquisitions such as the Motorola networks business, was smaller than expected. Revenues, down 13 percent from a year earlier, also declined less than feared. At the same time, it managed to keep its core division, Devices & Services, profitable at the operating level, excluding the one-time charges. It had previously said it expected an operating margin of breakeven plus or minus 2 points, and managed to report a profit margin of 2.4 percent. The company also continued to generate significant cash flow, which should support the upcoming launch of the first products from its alliance with Microsoft.
While it works on the Windows phones, the company is also concentrating on maintaining its market share where it can: in traditional mobile phones. Its latest Symbian smartphones have little chance versus the increasingly cheap Android handsets and the iPhone. Nokia's smartphone shipments in Q3 fell 38 percent from a year ago to 16.8 million units, which will likely translate into a further drop in its market share. However, it remains the world's largest overall maker of mobile phones, driven by its focus on strong growth markets such as India and China. Its recent push in dual-Sim phones paid off in the last quarter, with 18 million shipped, led by markets such as India, Russia and Africa, where consumers often swap Sims to take advantage of on-net and regional offers.
The Middle East and Africa was the only area where the company managed to grow device sales in both units and revenue terms on an annual basis in Q3. On a sequential basis, it also grew in Greater China and Asia Pacific. The company is using 'smart' pricing (ie, substantial discounts) to hold on to market share, as it faces growing competition from low-cost Chinese and Indian manufacturers. While this means the average selling price for feature phones dropped 20 percent from a year ago, the net effect on results was offset by the increased volume.
While it works on the Windows phones, the company is also concentrating on maintaining its market share where it can: in traditional mobile phones. Its latest Symbian smartphones have little chance versus the increasingly cheap Android handsets and the iPhone. Nokia's smartphone shipments in Q3 fell 38 percent from a year ago to 16.8 million units, which will likely translate into a further drop in its market share. However, it remains the world's largest overall maker of mobile phones, driven by its focus on strong growth markets such as India and China. Its recent push in dual-Sim phones paid off in the last quarter, with 18 million shipped, led by markets such as India, Russia and Africa, where consumers often swap Sims to take advantage of on-net and regional offers.
The Middle East and Africa was the only area where the company managed to grow device sales in both units and revenue terms on an annual basis in Q3. On a sequential basis, it also grew in Greater China and Asia Pacific. The company is using 'smart' pricing (ie, substantial discounts) to hold on to market share, as it faces growing competition from low-cost Chinese and Indian manufacturers. While this means the average selling price for feature phones dropped 20 percent from a year ago, the net effect on results was offset by the increased volume.
Nokia's future as the world's biggest handset maker will depend on whether it can convert this installed base of feature phone users to smartphone owners. Media reports suggest that the launch of its first Windows phones, expected at the Nokia World event in London next week, will be paired with a new branding campaign focused on young people. This matches a strategy to focus on emerging markets, where in many countries people under 30 make up the majority of the population and many will first use the internet on a mobile phone. If Nokia and Microsoft can come up with compelling devices for these users, the Finnish company may one day regain its top spot in the smartphone market.
