As Expected, Nokia Posts Massive Loss as Handset Sales Continue to Fall

Struggling handset maker Nokia this week posted a mammoth $1.2 billion quarterly loss as sales of its core products fell almost 30 percent year over year. The company blamed sagging interest in its aging line of Symbian-based phones, which Nokia is phasing out as it transitions to Microsoft’s Windows Phone platform.

“We are navigating through a significant company transition in an industry environment that continues to evolve and shift quickly,” Nokia CEO Stephen Elop said in a prepared statement. “Over the last year we have made progress on our new strategy, but we have faced greater-than-expected competitive challenges.”

Another key issue facing Nokia is mixed sales of its Lumia line of Windows Phone handsets. According to Nokia and AT&T, its latest flagship device, the Lumia 900, sold out across the United States and is still experiencing strong sales over a week after launch. But other Lumia models—the 710 and 800, which are available internationally, haven’t performed as well in certain markets. Nokia has also launched a low-end Lumia 610 in emerging markets, though it’s a bit early to determine how well that product is doing.

“We have launched four Lumia devices ahead of schedule to encouraging awards and popular acclaim [but] the actual sales results have been mixed,” Elop admitted. “We exceeded expectations in markets including the United States, but establishing momentum in certain markets including the UK has been more challenging.”

In a sign of bad news for the Lumia 610, Elop says he’s surprised by the rapid rollout of cheap Android-based phones in emerging markets like Africa, the Middle East, and parts of the Asia Pacific, areas that have historically been strong Nokia supporters. It’s unclear why that’s surprising: Android is freely licensed and seems custom-designed for the low end of the market.

Overall, Nokia shipped 83 million handsets in the quarter, down from 109 million in the same quarter a year ago. Of those, 12 million were Symbian and Windows Phone smartphones, mostly Symbian. (Nokia previously said that it sold over 2 million Windows Phones in the quarter.) Sales in Europe dropped 32 percent year over year while China saw an even bigger falloff of 62 percent. As a result Samsung is now expected to overtake Nokia as the world’s biggest supplier of handsets. That firm is already the world’s biggest maker of smartphones.

TAGS: Windows 8
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