Nokia Ends 2011 on a Low
Nokia Corp. (NYSE: NOK) had a disastrous 2011. But there's a glimmer of hope in Helsinki following some encouraging trends toward the end of the Finnish device giant's annus horribilis.
Nokia reported a full-year loss of €1.07 billion (US$1.4 billion) compared with a profit of €2.07 billion ($2.72 billion) in 2010. The loss included a €1.07 billion ($1.43 billion) goodwill impairment charge related to its Location & Commerce division. Without such one-time charges and restructuring costs (known technically as non-IFRS), Nokia's full year operating profit was €1.83 billion ($2.4 billion).
Full-year 2011 revenues were down 9 percent to €38.7 billion ($51 billion), with mobile device revenues down 18 percent to €23.94 ($31.45 billion).
The company's fourth-quarter numbers are no better. At €10 billion ($13.2 billion), revenues were down 21 percent from a year ago, while an operating loss (including one-time items) of €954 million ($1.26 billion) compared with a profit of €884 million ($1.16 billion) a year earlier. Excluding one-time costs, though, the fourth quarter non-IFRS operating profit was €478 million ($628 million), slightly better than expected.
Despite all the gloomy numbers, Nokia's share price is up by 6 percent to €4.30 on the Helsinki exchange Thursday.
There are two reasons for that. First, the slightly better-than-expected non-IFRS fourth-quarter operating profit. Second, a better-than-expected performance by Nokia's Smart Devices division.
Despite getting spanked by Apple Inc. (Nasdaq: AAPL) and the Android brigade during the past few years, Nokia, with the aid of its new buddy Microsoft Corp. (Nasdaq: MSFT), is showing renewed signs of life in the smartphone sector.
The company launched its first devices based on the Windows Phone operating system, the Lumia 800 and 710, in late 2011, with Nokia CEO Stephen Elop boasting in today's earnings press release that the launches were "ahead of schedule, demonstrating that we are changing the clock speed of Nokia." (See Nokia Illuminates Its Flagship Windows Phone, Nokia Lumia Lands on T-Mobile and Nokia Ships First Windows Phone to Europe .)
And sales of the Lumia devices, already at more than 1 million, have been better than anticipated. "From this beachhead … you will see us push forward with the sales, marketing and successive product introductions necessary to be successful," Elop added. "We also plan to bring the Lumia series to additional markets including China and Latin America in the first half of 2012."
Overall, Nokia's Smart Devices division shipped 19.6 million smartphones in the fourth quarter, better than anticipated.
The prospects for squeezing more life out of Symbian are diminishing, however. "Changing market conditions are putting increased pressure on Symbian," stated Elop. "In certain markets, there has been an acceleration of the anticipated trend towards lower-priced smartphones with specifications that are different from Symbian's traditional strengths ... We now believe that we will sell fewer Symbian devices than we previously anticipated."
On the network infrastructure side of the business, Nokia Networks , which is undergoing a massive transformation process, reported fourth-quarter revenues of just over €3.8 billion, down 4 percent compared with a year ago. (See NSN Could Lose More Than 17,000 Staff and Euronews: NSN Linked to €1.2B Loan.)
But that performance is worse than it looks. A year ago NSN didn't have the Motorola mobile networks business on board. So even with a broader portfolio and more customers on its books, its year-on-year sales still dipped. (See NSN Finally Seals $975M Moto Deal.)
With so much volatility in its devices and infrastructure divisions, and in the global economy in general, Nokia has stated that it's "not appropriate to provide annual targets for 2012."
— Ray Le Maistre, International Managing Editor, Light Reading