Nokia's losses continued to grow in the second quarter, and the handset maker expects a similar picture in Q3 as it works to regain market share in the important smartphone segment. The company's revenues tumbled 19 percent from a year earlier to EUR 7.542 billion, and the adjusted operating result moved to a loss of EUR 327 million, versus a profit of EUR 391 million a year ago. The net loss widened to EUR 0.38 per share, from EUR 0.10 last year.
At the main Devices & Services division, revenues were down 26 percent year-on-year and 5 percent from Q1 to EUR 4.023 billion. In line with its earlier profit warning, the adjusted operating margin worsened to a negative 9.1 percent, from 3.0 percent in Q1, and Nokia said it expects a similar result in Q3, plus or minus 4 percent points. The company maintained its target for EUR 3 billion in cost reductions at the division by the end of 2013.
The Finnish company shipped a total 10.2 million smartphones in the quarter, as a drop in Symbian sales could not be offset by shipments of 4 million Lumia Windows devices. Shipments were down in all regions, apart from North America, where the Lumia devices have been selling well. Total smartphone shipments were down 39 percent from a year ago and 14 percent lower versus Q1, but the average selling price improved over both periods to EUR 151, helped by sales of services and the Lumia devices.
Feature phone shipments grew 2 percent year-on-year and 4 percent sequentially to 73.5 million in Q2. However, growth was led by low-price models such as the Nokia 100 and 101, leading to a drop in the average selling price to EUR 31.
CEO Stephen Elop said the group is proceeding with "urgency" on its restructuring plans, and the priority will be to return Devices & Services to positive operating cash flow. Nokia group had a positive operating cash flow in the quarter of EUR 102 million, helped by USD 250 million in support payments from Microsoft and EUR 400 million in pre-payments from IPR licences. The company finished June with net cash of EUR 4.2 billion. While it conducted an impairment test in Q2, it said it found no need for asset writedowns at the moment.
While Q3 is expected to remain "challenging" for smartphones, the company expects the launch of Windows Phone 8 later this year will provide a boost to sales.
