Nokia reported third-quarter sales down 13 percent from a year earlier to EUR 8.98 billion, hurt by a continued fall in its handset sales. Revenues from its Devices & Services division tumbled 25 percent to EUR 5.39 billion, but the division did better than the company's forecast for an operating result around breakeven, posting an operating profit before one-time items of EUR 222 million, down from EUR 750 million a year ago. Smartphone sales fell 38 percent year-on-year to 16.8 million units, while feature phone sales were up 8 percent to 89.8 million, helped by its new dual-Sim phones, which sold around 18 million units. The average selling price was EUR 131 for smartphones, down 8 percent from the previous quarter and 2 percent lower versus a year ago. 'Tactical' pricing efforts and more low-cost devices meant the ASP for feature phones dropped 20 percent from a year ago to EUR 32. The Middle East and Africa was the only region to show annual sales growth in the quarter, with Devices & Services sales up 3 percent year-on-year there to EUR 957 million. On a sequential basis, sales improved in the Greater China region (up 36%) and Asia-Pacific (up 10%).
Nokia's group adjusted operating profit fell to EUR 252 million from EUR 634 million, and the net result moved to a loss of EUR 0.02 per share from a profit of EUR 0.14 a year earlier due to a number of charges for restructuring and acquisitions. Nokia confirmed it will launch its first phone running Windows Mobile by the end of the year in select countries. For the fourth quarter, the company forecast a sequential improvement in sales at Devices & Services, but extra seasonal spending and the Windows Phone launch will mean the adjusted operating margin will remain under pressure, at a forecast 1-5 percent. Nokia reiterated a forecast for over EUR 1 billion in cost savings at the division by the end of next year compared to 2010. CEO Stephen Elop said the company was seeing the first promising signs of its restructuring, but it still had many important steps ahead in its transformation. The company finished September with EUR 5.1 billion in cash and said it still expects to have more than EUR 3.9 billion cash at year-end. Operating cash flow in Q3 nearly doubled from a year earlier to EUR 852 million.
