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Nokia Q4: Device Sales Down, Losses Continue

Espoo, Finland – Nokia’s mobile-device dollar volume fell 29 percent in the fourth quarter and full year, and the business segment posted another operating loss in the quarter.

For the full year, however, the segment’s operating losses shrank 66 percent.

Unit sales of the company’s Windows-based Lumia smartphones fell sequentially to 8.2 million from the third quarter’s 8.8 million but were above the year-ago level of less than 5 million.

That’s the business that Microsoft will inherit when or if all goes according to plan and the computer giant purchases Nokia’s device business in the first quarter for 5.44 billion Euros ($7.43 billion) in cash.

Fourth-quarter device revenues dropped 29 percent to 2.63 billion Euros ($3.6 billion) and for the year by 29 percent to 10.7 billion Euros ($14.7 billion).

Operating losses in the device segment (smartphones and traditional mobile phones) hit 198 million Euros ($270.1 million) in the quarter compared to a year-ago operating profit of 97 million Euros. Full-year losses shrank 66 percent to 780 million Euros ($1.07 billion).

Device dollar volumes declined in both periods mainly because of declining sales of mobile phones, which comprise non-smart phones and low-cost Asha-OS smartphones, and to a lesser extent to declines in sales of smart devices, which consist of Windows-based smartphones and now-discontinued Symbian-based smartphones, the company said.

 Smart device dollar volume dropped because of “the strong momentum of competing smartphone platforms” and because the company discontinued sales of Symbian smartphones to focus on Windows Mobile phones, the company said. Sales of other phones fell because of lower volumes and lower average selling prices, in part because of “intense smartphone competition at increasingly lower price points and intense competition at the low end of our product portfolio.”

The company also didn’t disclose North American device sales as it had done in the past.

The device business’s full-year operating margin was 5.5 percent for the full year, an improvement over the previous year’s 9.8 percent. For the quarter, the device business posted a -7.5 percent operating margin compared to the year-ago 2.6 percent margin.

Full-year operating expenses were down 29 percent to 2.69 billion Euros $3.67 billion) because of reduced operating expenses in the mobile phone and smart device segments, “primarily due to structural cost savings as well as overall cost controls,” the company said.