Business, Hardware

2Q13 for Nokia: Increased Lumia Sales, U.S. a Hard Nut to Crack

Nokia Corp. (NYSE:NOK) just published their Q2 2013 earnings, and the report holds no surprises at all. On the financial side of the story, the company reported an operating loss of around $151 million with $7.5 billion in revenue. Despite the revenue results being lower than in the same period last year, it seems that the year of the catastrophic losses seems to be far behind the company, as they continue with restructuring on a smaller scale.

The company sold 7.4 million Lumia smartphones in 2Q13. To put things into perspective, in the same quarter last year, Nokia managed to sell only 4 million Windows Phone units, and 5.6 million in 1Q13. However, it seems impossible for the company to penetrate the U.S. market to noticeable levels, as they shipped only around 500 thousand units in the second quarter. As analysts noted, the ?rolling thunder? campaign Nokia tried didn?t bear any fruit at all. Many believe that exclusivity deals ruined the potential, paired with questionably good relations with mobile operators in the U.S. market and, of course, fierce competition. Worth noting is that the Windows Phone fortified the third ecosystem position, as Nokia managed to sell more smartphones than BlackBerry. Symbian sales have practically died out, with Nokia reporting sales were approximately zero.

All in all, Nokia Group managed to achieve underlying operating profitability for the fourth consecutive quarter, mostly thanks to the Nokia Siemens Networks performance. The company recently announced that they have agreed to buy out the 50% stake Siemens had for 1.7 billion euro.

?With our recent announcement to purchase Siemens? 50% stake in Nokia Siemens Networks, we believe we will create value for Nokia shareholders and look forward to strengthening Nokia Siemens Networks as a more independent entity (?) In Devices & Services, our Mobile Phones business unit started to demonstrate some signs of recovery in the latter part of the second quarter following a difficult start to the year (?) During the third quarter, we expect that our new Lumia products will drive a significant part of our Smart Devices revenue,? CEO Stephen Elop commented on the second quarter results.

Although the non-IFRS profit for the second quarter was up to almost $400 million, and Lumia sales continue to push onwards with each consecutive quarter, the full story remains unknown for the company. Nokia notes that performance might be slightly lower (Devices & Services with -2% non-IFRS operating margin, ?plus or minus four percentage points?) in the next quarter with a number of new devices possibly compensating for the better. Operating expenses are still being lowered, but the major restructuring and the most painful cuts should be long gone.