Nokia no longer a rotting apple, reports profit in Q4 earnings report
Nokia has finally managed to turn things around. The company has reported a profit of €439 million ($585 million), with €8.04 billion ($10.7 billion) in revenue. These figures were possible through stronger Lumia sales, Nokia Siemens Network and company restructuring. We believe Stephen Elop is currently cruising around with a megaphone, ensuring everyone hears the news.
The number of Lumia Windows Phones sold also saw an increase to 4.4 million, up from just 2.9 million in the previous quarter. We'd consider this as Nokia's most successful quarter since the company partnered with Microsoft and began supporting Windows Phone. As well as profit and sales, Nokia also increased its net cash reserves from €3.56 billion ($4.7 billion) to €4.36 billion ($5.8 billion).
While the bump in Lumia Windows Phone sales is a good thing, we cannot ignore the fact that this is not what's driving the company forward into sustainability. It's Nokia Siemens Network, a joint venture by both parties, which is contributing heavily to Nokia's income. It brought in $334 million, while Nokia's Device business contributed $367 million - including everything from Lumia to Asha.
Nokia also has an increased average selling price (ASP) of its smartphones, up from €140 ($186) the previous year to €186 ($248). This is due to the focus shift from low-cost Symbian hardware to premium Windows Phones - with some mid and low range devices to boot.
While Q4 proved to be a solid end of 2012 for Nokia, the company experienced issues throughout the year. Thus, the company will not grant a dividend to shareholders as it continues to move back into the black. Stephen Elop had the following to the say about the quarterly results:
"We are very encouraged that our team’s execution against our business strategy has started to translate into financial results. Most notably we are pleased that Nokia Group reached underlying operating profitability in the fourth quarter and for the full year 2012.
While the first half of 2012 was difficult for Nokia Group, in Q4 2012 we strengthened our financial position, improved our underlying operating margin in Devices & Services, introduced the HERE brand to expand our mapping and location experiences, and drove record profitability in Nokia Siemens Networks.
We remain focused on moving through our transition, which includes continuing to improve our product competitiveness, accelerate the way we operate and manage our costs effectively. All of these efforts are aimed at improving our financial performance and delivering more value to our shareholders."
Outlook into 2013
So what does this year hold for Nokia? What's the company predicting for the first quarter? Nokia expects its Devices & Services division to go back into loss-making. This is predicted to be caused by competitive industry dynamics and more, but the company is hoping for Nokia Siemens Networks to take the blow with a positive operating margin (though we could well be looking at softened blow as opposed to turning it around).
We'll expect to see continuing difficult periods for Nokia, especially as Microsoft battles on to market Windows Phone. BlackBerry 10 will be upon us soon, which will provide more pressure on Elop and the gang to ship Lumias and get consumers on-board. But we shouldn't remain down about prospects or the future. We cannot forget that Nokia has actually reported profit.
Source: Nokia (PDF)