Nokia Smartphone Sales Skyrocket as Losses Fall

Nokia Smartphone Sales Skyrocket as Losses Fall

Nokia has carved out a third smartphone ecosystem with Microsoft

In a preliminary financial report for the second quarter, Nokia reports that it expects to lose $364 million on revenues of $7.5 billion. But the news from the firm’s devices and services business is mixed: Nokia sold a record 7.4 million Windows Phone-based Lumia smartphones in the quarter and trimmed its operating losses significantly. But it still sold far fewer smartphones overall than it did in the year-ago quarter.

Most of Nokia’s revenues actually come from Nokia Siemens Networks, the network-equipment company that Nokia assumed full control of during the quarter. That division posted an operating profit of $10.5 million.

Related: "US Wireless Carriers Speed Smartphone Upgrades"

“We’re pleased to report an underlying operating profit for the fourth consecutive quarter on a group level,” Nokia CEO Stephen Elop said in a prepared statement. “We benefited from another strong performance at Nokia Siemens Networks, which continued to deliver well against its focused strategy. With our recent announcement to purchase Siemens's 50 percent stake in Nokia Siemens Networks, we believe we will create value for Nokia shareholders and look forward to strengthening Nokia Siemens Networks as a more independent entity.”

On the Windows Phone front, Lumia sales are racing upwards, and Nokia almost doubled its Q2 2012 Lumia sales of 4 million units in the most recent quarter. But the issue is that Lumias aren’t selling as well as the firm’s previous smartphone platforms. In Q2 2012, Nokia sold 10.2 million “smart devices” overall, including both Symbian and Windows Phone handsets. With Symbian now out of the picture, the Lumia line-up has big shoes to fill, and it hasn’t yet risen to that challenge.

That said, Nokia and Windows Phone have at least ousted BlackBerry as the third most frequently used smartphone platform. With RIM/BlackBerry selling just 6.8 million smartphones overall in the most recent quarter, most of them of previous-generation devices, Nokia Lumia by itself is now out-selling all of BlackBerry. And virtually all of Nokia’s Lumia sales are of new, current-generation devices.

“We are very proud of the recent creations by our Lumia team, from the Lumia 520—our most affordable Windows Phone 8 product, which has enjoyed a strong start—to the Lumia 1020, our star imaging product, which we unveiled to the world last week,” the Nokia interim report notes. “Overall, Lumia volumes grew to 7.4 million in the second quarter, the highest for any quarter so far and showing increasing momentum for the ecosystem. During the third quarter, we expect that our new Lumia products will drive a significant part of our Smart Devices revenue.”

Looking forward, Nokia does expect unit sales of Lumia handsets to climb again in the current quarter, but it expects that the financial results for that business unit will remain “approximately negative 2 percent.” The firm is preparing for the “ramp-up” of recently announced high-end Lumia smartphone sales as well as “new Mobile Phones devices.” Nokia previously promised it would be launching new devices before the end of the year.

Related: "Nokia Shareholders Express Growing Impatience with Turnaround Efforts"

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