The Devices & Services division posted a 32 percent annual decline in sales to EUR 2.724 billion, but met the outlook for a negative adjusted operating margin of around 2 percent, with a result of minus 1.2 percent. This was an improvement from minus 9 percent a year earlier but down from a positive 0.1 percent in Q1.
Lumia smartphone sales accelerated, with a 32 percent sequential increase in volumes to 7.4 million units shipped in the quarter, the highest ever. Symbian shipments dropped to zero. Nokia also shipped 4.3 million Asha touch phones, which were included in the Mobile Phones total of 53.7 million units. The sales of feature phones were down 27 percent from a year earlier and 4 percent from Q1, but Nokia said it saw some signs of recovery in the latter part of the quarter when it started to ship the new Asha 501. The average selling price continued to drop amid more competition at the low end of the market. The ASP was EUR 26 for features phones versus EUR 28 in Q1, while smartphones sold for an average EUR 157, down from EUR 191 the previous quarter.
Nokia said it plans a restructuring at the feature phone activities due to the difficult market conditions, which will result in the loss of 440 jobs globally. It still targets a reduction in annual operating costs at Devices & Services to around EUR 3 billion by the end of this year. The division's adjusted margin is expected to remain around minus 2 percent in Q3, as it ramps up spending to promote new phones. The new products and expanded distribution of smartphones are expected to support sequential growth in Devices & Services' sales in Q3.
The company also announced plans to accelerate cost reductions at Nokia Siemens Networks, following the recent agreement to take 100 percent control of the network equipment maker. The ongoing restructuring already led to a strong improvement in NSN's margins in Q2.
