Nokia reveals €1.34bn operating loss for Q1 2012

19 Apr 2012

Nokia has published its first quarter results for 2012 in which it said that it had incurred a €1.34bn operating loss.

Net sales were down from €10.4bn in the first quarter of 2011 to €7.4bn in the same period of 2012.

The net sales of mobile devices declined by 40pc from Q1 2011, while smartphone sales were down 51pc over the past 12 months.

Nokia said that it had sold 1.9m smartphones and 82.7m mobile devices in that timeframe.

It said the losses were due to greater-than-expected competitive challenges and seasonality. The Finnish company also said that the losses were primarily driven by charges related to restructuring activities.

Nokia is now set to streamline its sales management team. Colin Giles, the executive vice president of sales and a member of the Nokia leadership team, will be stepping down from his position. Apparently this will be effective as of 30 June 2012.

Nokia confirmed that, with Giles’ departure, it will restructure the sales organisation by reducing a layer of sales management. It said today that this was to ensure greater customer focus and provide senior leaders with greater visibility into market dynamics.

“We are navigating through a significant company transition in an industry environment that continues to evolve and shift quickly. Over the last year we have made progress on our new strategy, but we have faced greater than expected competitive challenges,” said Stephen Elop, Nokia CEO, today, after the publication of the results.

Nokia finished 2012 with €9.8bn worth of cash and other liquid assets. The company had warned last week that its Q1 financial results would fail to meet expectations.

Elop said today that while Nokia had released four Lumia devices ahead of schedule, the actual sales results have been mixed.

“We exceeded expectations in markets including the United States, but establishing momentum in certain markets including the UK has been more challenging,” he said.

“At the same time, the lower price tiers of our industry are undergoing a structural change, and traditional feature phones are challenged by full touch devices. As a result we are taking deliberate measures to continue to renew our Series 40 platform, and we plan to strengthen our line-up in Q2 2012,” said Elop.

He said that Nokia would now be making investments in its mobile phones business unit to address the gaps in the company’s offering.

Carmel Doyle was a long-time reporter with Silicon Republic