Lumia sales solid but Nokia still misses with Q1 results

Nokia today reported its Q1 results for 2013 and while things look good for its Lumia range of smartphones, the company still has some way to go before it’s really out of troubled waters.

The Finnish communications giant reported net sales of US$7.6-billion (EUR 5.9-billion), down on the US$8.65-billion (EUR 6.6-billion) that analysts were expecting.

The company can at least be buoyed by the performance of its Lumia range of smartphones. Most expected it to sell between five and six-million of the handsets and there they were bang on the mark. The company reports that it managed to shift around 5.6-million Lumias during the quarter. That’s a fraction of what Apple and Samsung manage with even just their top of the line devices, but it’s still not bad for a company that barely had a coherent smartphone strategy just a couple of years ago.

It hopes that a few devices in the class will help fuel further growth, but that’s in no way guaranteed.

If Nokia’s going to thrive in the future however, it needs them to do a lot better than they currently are, especially given that its overall device sales are down 25% quarter-on-quarter. That’s largely down to the fact that the feature phone space it once dominated is being subsumed by rivals as well as cheaper smartphones from Chinese manufacturers such as Huawei and ZTE. In fact Nokia’s total Mobile Phone sales in Q1 decreased 30% quarter-on-quarter to 55.8 million units.

Nokia Siemens networks, traditionally a strong performer for the company didn’t do so well either, decreasing 30% quarter-on-quarter. According to Nokia, this fall is largely down to seasonal factors and expects its non-IFRS operating margin in the second quarter 2013 to be approximately positive five percent, plus or minus four percentage points.

It’s worth bearing in mind however that the growth will come on the back of more cost-cutting exercises, which may mean more employees losing their jobs.

Despite those troubles, the company managed to maintain its return to profitability for a third consecutive quarter, something which CEO Stephen Elop was keen to push in his statement on the results:

“At the highest level, we are pleased that Nokia Group achieved underlying operating profitability for the third quarter in a row. While operating in a highly competitive environment, Nokia is executing our strategy with urgency and managing our costs very well.

We have areas where we are making progress, and areas where we are further increasing the focus. For example, people are responding positively to the Lumia portfolio, and our volumes are increasing quarter over quarter.
Nokia Siemens Networks delivered another strong quarter and contributed to an overall improvement in Nokia Group’s cash position. On the other hand, our Mobile Phones business faces a difficult competitive environment, and we are taking tactical actions and bringing new innovation to market to address our challenges.

All of these efforts are aimed at improving our financial performance and delivering more value to our shareholders.