Earnings reports

Elop Promises Nokia Will Change Faster

Nokia Corp. (NYSE: NOK)'s new CEO, Stephen Elop, is promising a fast turnaround at the mobile giant, which watched its smart-phone market share drop to 31 percent in the fourth quarter, down from 40 percent this time last year and 38 percent in the quarter before. (See Nokia Reports Q4 and Nokia's Q4 Shrinkage.)

The fourth quarter was Elop's first to report, and he used the company's call with investors to stress the urgent need for change at Nokia. Although the Finnish handset maker maintained its global lead with 123.7 million phones shipped in the quarter, its growth is slowing at a time when the rest of the industry is growing.

Nokia faces “very significant challenges” despite its “gems,” Elop said, evoking his favorite metaphor to describe Nokia's staff and customers, strong product capabilities, global reach, IPR portfolio, and advanced services and software. He called on the company to raise the execution bar and a change of company attitude. (See Nokia's 'Unpolished Gems'.)

“The industry has moved from a battle of devices to a war of ecosystems ... we need to operate as the challenger," Elop told investors Thursday. "Our industry has changed -- it’s time for Nokia to change faster.”

Nokia plans to present its mobile strategy to investors on Feb. 11 at a Strategy Day in London. Elop didn't delve into details on the call, but promised "a clear and concise message about the changes that are necessary and how we move forward." Ahead of the event, here are the somewhat vague plans he revealed:

  • The consistent delivery of great products
  • Being able to compete on an ecosystem-to-ecosystem basis
  • Taking maximum advantage of Nokia's strengths
  • Establishing sustainable differentiation
  • The need to sustain leadership in strong markets and “re-open doors in markets where we are weak”
  • Having a clear and simple strategy
  • Belief in being able to execute that strategy
  • Belief that the strategy will maximize shareholder value

Nokia didn't share numbers for its flagship N8, which shipped at the end of the third quarter. Chief Financial Officer Timo Ihamuotila only said that the N8 was a big part of its smart-phone mix and demand for it outstripped Nokia's ability to supply it. He also noted that the E7 model, originally expected to ship in the fourth quarter, will instead come out during the first quarter and won't affect earnings in that quarter. (See Nokia Delays & OS Plays and Nokia Sets the N8 Free.)

Interestingly, Elop commented that an option for Nokia to compete on an ecosystem-by-ecosystem basis was to "build, catalyze or join a competitive ecosystem." That could mean Nokia is exploring adopting Windows Phone 7 or Android in addition to Symbian, something it has denied considering in the past.

The numbers
Nokia's smart-phone volumes were at 28.3 million during the quarter, up from 26.5 million last quarter and 20.8 million this time last year. The company sold more than 5 million Symbian^3 devices, and its average selling price for smart phones grew to €156, up from €136 in the previous quarter, but down from €186 year-on-year. The ASP for all of the handset maker's phones was €69, up from €64 in the previous year's fourth quarter and up from €65 in the third quarter. Nokia reported an operating profit of €884 million, down 23 percent year-on-year, and net sales of €12.65 billion, a 6 percent increase from the previous year.

— Sarah Reedy, Senior Reporter, Light Reading Mobile

stelabokun 12/5/2012 | 5:14:21 PM
re: Elop Promises Nokia Will Change Faster

During the Q&A section, after asked to comment on the trends seen in different geographical regions, Elop decided to point out his disappointment in their North American operations “despite the effort that has been made in this market.” It seems that the change in the top leadership hasn’t yielded the expected results for Nokia in NA, at least not to date.
Btw, while Nokia’s MSh continues to shrink, Samsung just reported global handset shipments increase of 23% yoy  in 2010 and projected they would ship 60m smartphones in 2011, more than doubling the 2010 shipments.

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