Nokia loses $1.7bn in Q1, sales chief falls overboard
That sales collapse in full
By Andrew Orlowski • In Financial News • At 13:21 GMT 19th April 2012
Nokia's sales chief Colin Giles will depart in a shake-up of the company's commercial operation, the mobe maker announced in its earnings call today. After he clears his desk in June, 20-year veteran Giles won't be replaced, with the four regional senior VPs now reporting directly to head of markets Niklaus Savander.
As the company predicted, its Q1 2012 results are bleak – and far worse than the market had feared. Nokia lost €1.34bn [$1.7bn, £1.09bn, -€260bn non-IFRS] on net sales of €7.35bn in the first three months of this year. Which means revenue is down almost a third from a year ago, and the company has burned through over €2bn in the last six months. The company says it has €9.79bn in cash and other assets, with the cash picture boosted a little by "quarterly platform support payments" from Microsoft.
Elop has succeeded in cutting costs from Nokia, with operating expenses 15 per cent lower than a year ago at the phones division, and 33 per cent lower for the smart devices (aka smartphones and tablets) part of the phones division: a consequence of throwing Symbian out of the nest. But revenue is falling even faster.
Nokia's phones division saw revenue collapse from €7bn from the year-ago first quarter to €4.2bn in Q1 2012, and down 30 per cent from Q4 2011. Smartphone sales fell from 24.2 million a year ago to 11.2 million in Q1 2012. The collapse in device shipments was most dramatic in China, where the company shipped 23.9 million units a year ago but only 9.2 million in the equivalent period this year. Sales held up relatively well in Africa and Asia (except China) - but this doesn't translate to a profit: the company recorded a negative operating margin of 3 per cent.
Nokia blamed "lower seasonal demand for our feature phones and aggressive price competition" for the collapse, along with "increased competition from more affordable smartphones and competitors with broader portfolios of feature phones with more smartphone-like experiences, such as full touch devices."
Stubborn UK buyers aren't buying into the Windows dream – or at least not yet, the company acknowledged, with Elop describing the UK market as "challenging".
CEO Stephen Elop said the company had shipped its first Windows phones ahead of schedule, and won a generally positive reception in the United States. But these are not market-changers, which Nokia needs. The most talked-about phone at February's Mobile World Congress was a Nokia device – a 41MP cameraphone. But it's based on Symbian. A few more such dramatic developments might get the company noticed.
Earlier this week four European mobile operators – who want Nokia to succeed – castigated the company for its poor products and lacklustre marketing. ®