Nokia reports US$1bn operating loss – sales fall 19pc year-on-year
Nokia's head offices in Espoo, Finland
Nokia’s gamble on smartphones has so far failed to deliver and the company has reported a whopping €826m (US$1bn) operating loss for the second quarter. Revenues fell 19pc year-on-year from €9.2bn this time last year to €7.5bn in the second quarter of this year.
The Finnish mobile phone giant said the €7.5bn sales in Q2 were nevertheless a slight improvement on the €7.4bn in sales reported in the first quarter of this year.
Nokia Devices & Services Q2 net sales decreased 5pc quarter-on-quarter.
The company’s hoped-for revival on foot of incorporating Microsoft’s Windows Phone 7 operating system has so far failed to deliver. Its Windows-powered Lumia smartphone Q2 volumes increased quarter-on-quarter to 4m units.
Overall mobile phone volumes increased quarter-on-quarter and year-on-year to 73m units.
Nokia ended Q2 with gross cash of €9.4bn and net cash of €4.2bn.
"Nokia is taking action to manage through this transition period. While Q2 was a difficult quarter, Nokia employees are demonstrating their determination to strengthen our competitiveness, improve our operating model and carefully manage our financial resources,” said Nokia CEO Stephen Elop in a statement.
“We shipped 4m Lumia smartphones in Q2, and we plan to provide updates to current Lumia products over time, well beyond the launch of Windows Phone 8. We believe the Windows Phone 8 launch will be an important catalyst for Lumia.”
Among Nokia’s difficulties was the decision to slash 10,000 jobs and close facilities in Finland, Canada and Germany, which it announced last month.
Elop added that while the third quarter will remain difficult, “it is a critical priority to return our Devices & Services business to positive operating cash flow as quickly as possible”.