Nokia Posts $1 Billion Loss As Smartphone Sales Struggle

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Nokia Posts $1 Billion Loss As Smartphone Sales Struggle

The bad run continues for Nokia Corporation (NYSE:NOK), as it announced today a $1 billion operating loss on $9.23 billion in net sales in the second quarter.

Nokia, like others who have recently announced their earnings (BOA, BlackRock, Inc. (NYSE:BLK), beat analysts’ estimates, but in a negative way. Analysts expected a loss of around $420 million on revenues of 9.27 billion. Though, analyst were right on one point, that the Lumia model would sell about 4 million units, and financial results have confirmed this. Nokia’s net loss almost quadrupled in the second quarter on disappointing sales of Smartphone’s, a market in which the company is struggling to capture the ground lost to rivals, mainly Apple Inc. (NASDAQ:AAPL) and Samsung (LSE:SMSD). Smartphone sales disappointed, with 34 percent decline, while overall sales were down by 19 percent.

Commenting on the results, Nokia’s CEO, Stephen Elop said that the third quarter would “remain difficult” as the phase-out of Symbian phones continues. He said the upcoming launch of a new version of the Windows operating system, i.e. Windows Phone 8, would be an “important catalyst for Lumia.” But there were already some questions raised about the Lumia sales in US earlier this week, when Nokia Corporation (NYSE:NOK) and AT&T Inc. (NYSE:T) halved the price of the flagship Lumia 900 to $50, and that also within three months after its introduction, naming it as a normal strategy that is put in place during the life cycle of most phones.”

The Finnish company enjoyed the status of the world’s leading mobile phone maker for more than a decade before being overtaken by Samsung in the first quarter, according to research firm Gartner. It’s not that Nokia did not try to overcome the competition from Apple’s iPhone and other devices running on Google’s Android software, but the plans did not get expected results. To regain the lost market share Nokia partnered with Microsoft last year, replacing Nokia’s existing Symbian operating platform with Microsoft’s (NASDAQ:MSFT) Windows Phone software. Even Nokia was expecting a decline in sales during this transition from Symbian to Windows, Nokia said that the decline of Symbian phones pulled down sales in all regions expect for North America, where the decline was “more than offset” by sales of the Lumia devices.

As a measure to stay afloat, Nokia Corporation (NYSE:NOK) announced last month to cut 10,000 jobs, and close down research and development facilities in Ulm, Germany, and Burnaby, Canada, as well as its main manufacturing plant in Salo, Finland.

Share price of the company jumped on the back of better than expected sales of lower-end devices, shipping 84 million such units compared to market expectations of 80 million. Nokia’s global market share has steadily fallen from the peak of 40 percent in 2008 to 29 percent in 2011 and is expected to fall further this year.

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