- 04-18-2013, 06:42 AM #1
Nokia just released their earnings report for the first quarter.
Looks like estimates were pretty accurate this time.
Basically, Lumia Q1 sales volumes increased 27% quarter-on-quarter to 5.6mn units, while everything else in their devices and services division is getting worse, meaning they are selling ever fewer Symbian and feature phones:
EDIT (everything below):
Mobile Phones are down 30%, from 79.6mn to 55.8mn units (this includes their Asha devices, of which they sold 5.0mn units)
Symbian Smartphones are down from 2.2mn to 0.5mn units
The average selling price for a smartphone was €191 (includes Symbian devices)
Their most profitable division by far was Nokia Siemens Networks, with an operating margin of 7%. Depending on how you parse the numbers, their devices and services division is either still loosing money, with an operating margin of -1.5%, or just barely breaking even at 0.1% (non-IFRS).
My main takeaway from this is that Nokia's devices and services division will have to rely almost entirely on Lumia sales very soon. Few expected their Symbian devices to contribute much to their bottom line for much longer, but their feature phone sales (includes Asha devices) are deteriorating even faster at over -30% per quarter. As it is now, Lumia sales aren't rising fast enough to compensate for the other loses. It looks to me like EOS and Catwalk can't come soon enough.
What do you think?
Last edited by a5cent; 04-18-2013 at 07:51 AM. Reason: See edit
- 04-18-2013, 07:04 AM #3
EPS = -0.07
EPS (non-IFRS) = -0.02
I can only assume that means their assets depreciated by more than what they earned, but I don't see that in their report.
- 04-18-2013, 07:42 AM #5
Scanning through the document some more:
- Two thirds of WP devices sold were WP8 based, meaning Nokia still sold a lot of WP7 devices!
- Lumia sales volumes increased sequentially in all regions except for North America!
- It sounds like the L620 is one of their best sellers (quote from page 9):
On a sequential basis, the decrease in our Smart Devices volumes in the first quarter 2013 was primarily due to
lower Symbian volumes, partially offset by higher Lumia volumes as we started shipping the Lumia 620 in
Nokia explicitly mentions higher warranty costs as having had a negative impact. I think we all know where that came from.
Last edited by a5cent; 04-18-2013 at 07:51 AM. Reason: See edit
- 04-18-2013, 07:54 AM #6
good thing i don't run a multi billion dollar company, cause i can't understand how there is 27% growth q/q , but no profit.
that's ok, there are lots of things i don't understand. looks good for nokia though, if they can get in the black.
- 04-18-2013, 08:03 AM #7
- Nokia sold 27% more Lumia handsets than they did last quarter.
- Unfortunately, their profits from Symbian and feature phone sales are collapsing much faster than their profits from Lumia sales are growing.
- Their operating costs are pretty much the same (wages, marketing expenses, etc).
- Since the growth in Lumia sales can't make up for everything else that is going to h3ll, their overall earnings are shrinking.
- 04-18-2013, 08:54 AM #8
Microsoft finally needs to get serious about North America and realize that THEY need to do the heavy lifting. As I've said all along, WP needs two or three unique capabilities that it does better than anyone else, without which they might as well not market WP at all. You can't market a device if there is nothing enticing to show! Dancing college kids won't cut it. Apparently, Microsoft is planning to put a lot of financial support behind the L928 launch on Verizon, but unless GDR2 includes a massive surprise, I fear it too will do nothing but waste Microsoft's money, just like all their other WP related marketing endeavours to date.
- 04-18-2013, 09:11 AM #9
What Nokia should worry about is their 3xx series phones.
The Lumia line is strong, and that momentum should continue through Q2 and Q3, and their basic phones are still going to sell well (cheap), but at this rate, they're going to lose one if the most important markets, where they can sell shiploads while still having decent margins.
In my opinion, they need to release a smartphone, an *actual* smartphone in the 3xx range.
- 04-18-2013, 11:55 AM #11
Looks like Nokia still has a long way to go before making a significant dent in the N. American market. Sadly, that means many of us will continue to be the lone Lumia strongholds in our groups, lol.
Hopefully sales remain strong. The release of the 720 looks promising. And, IMO, Nokia has probably the best selection of low-mid tier smartphones. Things are (slowly) moving up for Windows Phones.
- 04-18-2013, 01:41 PM #12
- 04-18-2013, 03:41 PM #13
One more thing:
Apparently, Q1 is traditionally a very weak quarter. Nokia traditionally sells 25% fewer devices in the quarter following Christmas. Given this expectation, many analysts were surprised to see that Nokia sold more Lumias than they did during the previous quarter, which is traditionally the strongest. As such, selling 27% more Lumias is an even bigger deal then one might think. Nokia is expecting to grow Lumia sales by another 25% for Q2 2013.
04-19-2013, 01:31 AM #14
- 88 Posts
- 04-19-2013, 01:03 PM #15
On the other hand, consider that during this last quarter a third of all WP devices sold were STILL running WP7. A third! That is saying that demand for WP7 devices didn't just evaporate into thin air at the top of Q4 2012, and that we might not have witnessed much of an osborne effect at all (nobody was rushing to buy WP7 devices, but the amount of people waiting it out for WP8 wasn't significant either). IMHO, WP8 has not and can not kill WP7. What will kill WP7 are WP8 devices that are released at similarly low price points, like the L520, which is just now hitting the market.
Anyway, I'm not claiming you're wrong. I really don't know. Just food for thought.
We probably won't be able to tell until we get the Q2 earnings report. If Nokia can grow their Lumia sales by another 25% - 30% next quarter, then their growth trajectory is real, as opposed to just looking good compared to last quarters suppressed sales volumes.
- 04-19-2013, 03:59 PM #16
04-19-2013, 04:44 PM #17
- 320 Posts
Nokia shouldn't concentrate on the worlds most over-saturated (and second biggest smartphone)-market... They should focus on the largest _cellphone_ markets in the world. Growth will be where there's alot of cellphone customers and a low saturation of smartphones.
Competing against such high-profile competitors as Apple, Blackberry and Samsung in the US will probably cost more than what it's worth in the short term... Long term it _might_ be a good idea, but Nokia kind of is in a "short term"-place right now. They've done great in some Euro countries where the smartphone isn't as saturated.
- 04-20-2013, 12:25 AM #18
I suspect Nokia expected some of this tug at its financials but its not a stupid company either and they don't make too many bad decisions like that fool that runs Sprint. At the same time, if at some point Nokia can announce a big feature app like Instagram, (official) and Big M can deliver this thing most people call Notification, it will blur the lines between services and create that symbiotic relationship between ecosystems most of us are looking for. That will go a long way to add to its growing Nokia family. I think this remains encouraging. Pushing up the handset spec won't hurt either.
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