Nokia Q1 results are in, Microsoft deal finally detailed

Nokia announced their Q1 financial results today and marked an increase in net sales and units shipped year over year. Operating profit however took a hit but the Microsoft/Nokia agreement was signed, making the deal official.

First, let’s look at Nokia’s financial performance. Nokia’s Devices and Services department reported €7,087 million in net sales (a 6% increase year over year), but operating profit went down 14% year over year, to €694 million (was €804 million in Q1 of 2010).

Nokia shipped 108.5 million units in total, a slight uptick from the year-ago quarter. Feature phones accounted for 84.3 million of that, while smartphones took 24.2 million. That puts smartphone numbers at nearly a third more than what they were in Q1 of 2010.

The gross margin for the first quarter was 29.1%, down from 32.4% in the year-ago quarter. The Average Selling Price went up €65 compared to last year’s first quarter, but down compared to Q4 of 2010 (€69).

Predictions put net sales between €6,100-6,600 million for Q2, which Stephen Elop, Nokia’s newly appointed CEO, says will be “more challenging”.

NAVTEQ’s sales and profits improved in Q1 and are bound to improve even more with the Microsoft/Nokia deal in place.

Speaking of the deal, here’s what it entails in short:

• Nokia will deliver mapping, navigation and location based services to the Windows Phone 7 eco system. It doesn’t say if non-Nokia phones will get free navigation or not.
• Nokia will provide imaging and hardware design expertise, carrier billing connections and receive payments for its intellectual properties.
• Nokia will be paying royalties to Microsoft for each Windows Phone 7 device they make, but they’ll receive payments “in the billions” from Microsoft.
• A Nokia-branded app store will be built on the Windows Marketplace infrastructure.

Microsoft and Nokia aim to secure “volume device shipments” in 2012.

You can find more financial info here (PDF) or read more on the Microsoft/Nokia agreement here.