Disappointing Q2 for Nokia, set to launch first WP7 phone this year

Tags: Nokia

Nokia just announced their Q2 financial results - sales volumes decreased and the company posted an operating loss of nearly half a billion euro. On the up side, IP royalty payments went into Nokia's pocket, to the tune of 430 million.

Net sales of the Devices & Services department of Nokia decreased 20% Year-on-Year (YoY), down to 5.5 billion. Of that, feature phones pulled in 2.55 billion (20% down YoY) and the smartphones made 2.37 billion (down 32% YoY).

The company as a whole (including Nokia-Siemens Networks and NAVTEQ) has 9.26 billion in net sales (down 7% YoY) and an operating loss of 487 million.

The Average Selling Price (ASP) remained mostly unchanged since last year's Q2 - overall it was 62 (up from 61), smartphones getting 3 pricier on average (142 ASP for Q2 of 2011) while feature phones' ASP fell a euro to 36.

It was the lower shipping volumes that reduced sales. Nokia shipped 20% fewer devices overall (88.5 million in total, compared to 111 million for Q2 2010). The European, Asian-Pacific and Chinese markets saw significant reductions in unit volumes - about 6-8 million devices less were shipped this quarter compared to the year-ago quarter.

Nokia's smartphones aren't doing too hot, taking a 31% decrease in shipment volumes and their gross margin for Q2 2011 went down to 25.7% (from 32.2% in Q2 2010).

Nokia introduced a new platform, MeeGo, with the Nokia N9 and they've started shipping the first Symbian Anna phones this quarter plus they've started shipping the Symbian^3 handsets with Anna, but that didn't help much as there was strong pressure from competing smartphone platforms, especially in Europe and China.

Feature phone shipments fell 16% YoY. Dual-SIMs were in high demand, though those launched late in the quarter, which reduced their impact. QWERTY-packing feature phones were also strong performers.

During Q2 of 2011, Nokia outsourced Symbian's development to Accenture and 2,800 Nokia employees will transfer to Accenture in October. Also, Nokia's global workforce will be reduced by 4,000 by the end of 2012. This is all part of Nokia's cost reduction plans.

Looking to the future, CEO Stephen Elop says they've received "optimistic" responses to their Windows Phone 7 developments. Starting this year, they will do "a sequence of concentrated product launches in specific countries".

He also reaffirmed that Nokia knows how to defend its intellectual property (430 million in royalties from unnamed companies are proof of that) and while this quarter's results were disappointing, their plans for the long term are going well.

You can check out the full report here (Note: PDF file), where you'll find plenty more numbers of Nokia's performance during Q2.

Source (PDF)


 

 

Disappointing Q2 for Nokia, set to launch first WP7 phone this year - reader comments

  • Rollindice

I definitely agree with you there bro, i believe alot of people are reluctant to try another OS, actually trying different mobile OS you'll be sure to see than WP7 is pretty neat alongside it's Mango features we've seen online also. Let's just h...

  • Reply
  • 2011-07-24 07:47
  • LBHR
  • Nokia Rules

The Board of Directors are the ones who put Elop in there. They liked Elop's ideas and he's the right man for the job. Blame the previous CEO and his incompetence for Nokia's downfall. Elop is just doing what is practical and he's trying to save N...

  • Reply
  • 2011-07-23 15:43
  • kJX3
  • Lubba

I'm not sure what your grudge is against nokia or MS and i really don't care. I myself don't care about nokia, but i do admire wp7 OS for what it has or had offered me, unlike iOS or android. I'm also the kind that doesn't run to and buy a product ...

  • Reply
  • 2011-07-23 11:50
  • ECaF