Nokia reported a net loss and sharp fall in sales in the fourth quarter, while announcing already over 1 million of its Windows Lumia smartphones sold. Due to an impairment charge of EUR 1.1 billion on its Location & Commerce services activities, the Finnish handset marker posted a net loss of EUR 0.29 per share, versus a profit of EUR 0.20 a year earlier. Excluding the impairment and other restructuring charges, EPS fell 73 percent to EUR 0.06. Sales were down 21 percent year-on-year to EUR 10.01 billion, driven by a 29 percent fall in sales at the main Devices & Services division, to EUR 6.0 billion. Location & Commerce contributed EUR 305 million in sales, up 15 percent, while Nokia Siemens Networks reported sales down 4 percent to EUR 3.82 billion. Adjusted operating profit for the entire group declined 56 percent to EUR 478 million.
The number of phones shipped fell 8 percent from a year ago but was up 6 percent from Q3 to 113.5 million. Sequential growth came mainly in Europe (22%) and Asia-Pacific (7%). Smartphone sales were down 31 percent year-on-year, but 17 percent higher sequentially to 19.6 million, while feature phones dropped just 1 percent annually and rose 5 percent from Q3 to a total 93.9 million. The average selling price across all devices was down 23 percent year-on-year to EUR 53. Adjusted operating profit plunged 72 percent at Devices & Services, to EUR 292 million, giving a margin of 3.4 percent, in line with the company's guidance. Nokia forecast a further drop in the margin in Q1 to around breakeven, plus or minus 2 percent points, citing tough competition, a stronger seasonal decline than normal and time to ramp up new product launches. It also noted that Symbian sales are falling quicker than expected, due to competition from other low-cost smartphones, meaning it will sell fewer Symbian phones than previously forecast. It will continue to ship Symbian phones to "specific regions and channels" and provide support to customers through 2016.
Calling 2012 a "year of transition", the company did not give any annual outlook. CEO Stephen Elop said the company was "overall pleased" with the mobile phone business' performance, with a "beachhead" established in the battle among smartphone ecosystems. He cited continued strong growth in dual-Sim phones, including the new Asha models, and said Nokia will continue with the country-by-country roll-out of its new devices. While operating cash flow fell 26 percent from a year ago to EUR 626 million, Nokia's total cash position remained strong at over EUR 10 billion. Despite a net loss of EUR 1.5 billion for the full year, it will pay a dividend of EUR 0.20 per share. Over the longer term, the company targets growing Devices & Services sales faster than a market and an adjusted operating margin of 10 percent or more for the division.
