Nokia hit by $832 million loss in third quarter
Nokia on Thursday reported a loss for its third quarter of 559 million euros ($832 million) compared with a profit of 1.09 billion euros in the same quarter of 2008.
The net loss for the period that ended September 30 was triggered by declining sales, which fell 20 percent to 9.18 billion euros from 12.2 billion euros the prior year's quarter. A write-down of the company's weak Nokia Siemens Networks unit also put a big drag on the bottom line.
Net sales for the third quarter came in at 9.8 billion euros, down 20 percent from 12.2 billion in the year-earlier quarter.
Following the news, shares of Nokia stock fell 6.6 percent to 9.62 euros.
Though Nokia's mobile phone sales managed to eke out some gains, overall revenues were hurt by a shortage of components for many of its products.
"The demand for mobile devices improved in many markets during Q3," Nokia CEO Olli-Pekka Kallasvuo said in a statement. "With the average selling price of our devices holding firm quarter-on-quarter, our higher device volumes translated into increased net sales in our Devices & Services business. Our volumes and net sales were, however, somewhat constrained by component shortages we encountered across the portfolio.
The company said that its share of the mobile device market for the quarter was 38 percent, the same as in the year-earlier period and in the second quarter of 2009.
Nokia Siemens Networks, the network equipment unit formed in 2007 and co-owned by Nokia and Siemens, has struggled to turn a solid profit from the get-go. In a write-down of this failing business, Nokia was forced to spend 908 million euros.
(Credit:
Nokia)
"The challenging competitive factors and market conditions in the infrastructure and related services business necessitated non-cash impairment charges at Nokia Siemens Networks," said Kallasvuo.
Despite weakness in the mobile phone sector, Nokia is optimistic about its near-term outlook. The company now sees volume for its phones hitting 1.12 billion units for the year, down 7 percent from 2008, but better than Nokia's earlier estimate of a 10 percent decline.
Nokia expects the market for its mobile infrastructure and related services market to fall 5 percent for the year from 2008 levels, an improvement over earlier estimates of a 10 percent drop.
However, the future remains cloudy for Nokia Siemens Network, which is likely to see its market share drop even further for 2009 than previously forecast, said the company.
During the third quarter, Nokia also completed its acquisition of GPS map specialist Navteq.
Lance Whitney wears a few different technology hats--journalist, Web developer, and software trainer. He's a contributing editor for Microsoft TechNet Magazine and writes for other computer publications and Web sites. You can follow Lance on Twitter at @lancewhit. Lance is a member of the CNET Blog Network, and he is not an employee of CNET. 
Nokia's problems aren't mainly in the smartphone category, but in the standard cell phones. They were hit by Samsung, LG, etc. which offer great devices.
The line between smartphones and standard phones is becoming blurry, and I think that in the near future the standard phones probably will have the same capabilities has today's smartphones.
That $832 million loss was due to the Nokia-Siemens Networks (NSN) subsidiary (which makes telecom equipment), not because of losses in their mobile phone division. And much of NSN's loss was a non-cash accounting charge ("goodwill").
If you look at the "Devices and Services" line you can see that Nokia actually made $785 million *profit* from their mobile phones, and 3rd-quarter demand was better than expected. Even in the worst-case scenario Nokia could "simply" jettison NSN and be profitable with their mobile division.
It was the leader in mobile phone innovation and then it got lazy and started to neglect its user base.
I for one, was a Nokia user for many years until the N73 that I had owned for 7 months had a failure in the navigation stick. I returned it for a warranty repair and was informed that they would not repair it because it had some unrelated "moisture penetration". I argued for weeks about the fact that he phone had never been dunked, used in the rain or near moisture in any circumstance. Nokia stood firm and refused my warranty claim. I ended up paying a phone repairer AU$30 to replace the navigation stick and the phone continued to function perfectly until the end of my contract.
Of course I chose a different company for my next "smart phone" and I will not use Nokia again as long as my ass points to the ground.
Mark
- uh, what? You can purchase any Nokia device in the US and run it on at least one of the major carriers. The problem that Americans have with Nokia phones is that most of their devices aren't subsidized by carriers. For some reason they don't see the value and freedom in paying for an unlocked device upfront. They love to buy things on credit with a contract.
As far as everyone thinking that Nokia is going to be gone in the next year or two. Dream on.
they need to deploy it ASAP on all their smart phones
and get rid of that crappy symbian O.S !
- by Frogg11 October 15, 2009 10:44 PM PDT
- Agree that Nokia is too narrowly focused on Europe & wherever it seems to be focused.
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(17 Comments)The US misses out on good handsets and so does Australia (but not to the same extent).
They not only need to improve their smartphones with capacitive touchscreens etc, but also make hansdsets with chips that cover all the commonly used frequencies, so they can be sold anywhere.
Too often I see a good Nokia handset which doesn't have 850mhz 3G HSPA so it is useless on Australia's largest network.