News Column

Nokia Handset Sales Hung up in December

January 23, 2014

Juliette Garside,

nukia lumia
Nokia Lumia 900 (Villeke1, Creative Commons)

Nokia's Lumia smartphones failed to light up Christmas gift lists, with handset sales for the Finnish group falling 5% during the crucial December quarter compared with the previous three months.

Sales of the flagship Lumia range, on which Nokia had pinned its hopes of a revival, actually fell during the festive period, with 8.2m sold compared with 8.8m in the September quarter. Shoppers may have been rattled by last autumn's announcement that Nokia was to sell its handset business to Microsoft for 5.4bn (4.43bn) in cash.

The news could damage prospects for former Nokia chief executive Stephen Elop, who is one of the candidates named as a potential replacement for Steve Ballmer at the head of Microsoft. The arrival of popular apps including Instagram, Waze and Vine on to the Windows Phone software platform used by Lumia phones, the release of Nokia's first large screen smartphones, or phablets, and its first Windows 8 tablet, the Lumia 2520, were not enough to halt the slide.

Microsoft, which is expected to take control of Nokia by the end of March, may take comfort from the fact that 30m Lumias were sold in 2013 compared with 14m the year before.

But the handset business suffered a 29% year-on-year drop in sales, with revenues tumbling from 2.8bn in the September quarter to 2.6bn in the three months to 31 December.

"The year-on-year decline," according to the results statement, "was primarily due to lower mobile phones net sales and, to a lesser extent, lower smart devices net sales ... Our smart devices net sales were affected by competitive industry dynamics including the strong momentum of competing smartphone platforms, as well as our portfolio transition from Symbian products to Lumia products."

The average selling price of smartphones has also fallen, Nokia stated, although the company would not disclose numbers. The handsets business lost 590m in 2013. The company said it had written off 50m in excess handset components and future purchase obligations, with losses widening in the fourth quarter to 198m, and forecast ongoing losses during the first quarter.

Nokia's remaining network equipment and mapping business fared better, with net sales up 19% to 3.5bn quarter on quarter. The divisions made 274m in operating profits during the fourth quarter as network owners invested in better mobile internet coverage and the company gained market share.

Risto Siilasmaa, Nokia chairman and interim chief executive, said: "The strength of NSN's underlying profitability highlights just how fundamentally different the company is today, compared with two years ago when it started its restructuring and transformation program. Today, we are more focused, more innovative and more disciplined."

Nokia shares fell 3.5% in Helsinki to 5.52. Microsoft will update the market on its financial performance later on Thursday.

(c) 2014 Guardian Newspapers Limited.

Original headline: Nokia handset sales drop over Christmas period

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Source: (c) 2014 Guardian Newspapers Limited.

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