Nokia can’t stop mega losses

Nokia can't stop mega losses

In the past quarter, the minus increased to 1.4 billion euros, as the finnish company announced on thursday. Sales fell 18.7 percent year-on-year to 7.54 billion euros. The current quarter will also be "difficult," conceded group CEO stephen elop.

The continuing decline in smartphone sales is particularly painful: sales of computer handsets fell by 39 percent to 10.2 million units. Among them were four million smartphones of the new lumia series with the microsoft operating system windows phone. Sales of the hopeful device introduced at the end of 2011 have doubled compared to the first quarter – but market leaders samsung and apple can regularly bring 35 to 40 million smartphones to customers within three months.

Nokia has been deep in the red for several quarters now. 2011 ended with a loss of 1.16 billion euros. In the first quarter of 2012 alone, there was a loss of 929 million euros. The figures are "unacceptable," admitted chief financial officer timo ihamuotila. Nokia is aware that costs had to be cut quickly, they say.

Elop launched a drastic cost-cutting program in june with the elimination of 10,000 jobs. Among other things, the research site in ulm will be closed down.

Elop emphasized that cash reserves remained stable at 4.2 billion euros after deducting the dividend payment. The charges at the troubled network supplier nokia siemens networks were comparatively moderate this time at 190 million euros, and the division was even profitable again on an operating basis.

Following the quarterly figures, nokia shares, which have been badly battered of late, rose by more than 16 percent to 1.60 euros. However, the stock has lost about 60 percent of its value since the beginning of the year.

Nokia set the tone in the cell phone industry for more than a decade, until apple’s iphone and google’s android operating system ushered in the smartphone revolution. In the past few years, the finns were able to rely on their strong position in simple cell phones, but now they are facing more and more competition in this area as well. At the beginning of the year, samsung toppled nokia from its throne as the world’s largest cell phone manufacturer.

In the past quarter, total sales of nokia cell phones fell five percent year-on-year to 83.7 million units. They also became cheaper: the average price of a cell phone dropped by almost a quarter to 48 euros. In the case of simple phones, the most recent figure was only 31 euros, but even for smartphones, nokia receives 151 euros, significantly less than apple for its iphones, for example. At least there was a slight increase compared to the first quarter. Group sales also increased by 13 percent quarter-on-quarter.

Nokia decided last year to switch from its outdated symbian platform to windows phone. Microsoft supports the partner with 250 million dollars per quarter, but at the same time nokia has to pay licenses for windows phone.

The hope of nokia and microsoft is to establish windows phone as the third strong force in the mobile market next to android and the ios system of apples iphones and ipads. The lumias have not been able to do this so far, but the partners promise a long breath. Elop said he is counting on the next software version windows phone 8, expected this fall, as a drawing card. One problem, however, is that previous lumia models will only be compatible with the next mobile windows version to a limited extent.

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