Nokia reported a smaller-than-estimated loss yesterday and forecast a profitable quarter for the handset business as the Finnish manufacturer prepares to introduce models based on Microsoft’s software. The shares surged.
The third-quarter net loss was e68 million (R749m), Nokia said yesterday. Analysts had projected a e229m loss. Shipments of lower-priced handsets jumped 8 percent to almost 90 million units, boosted by models with two SIM-card slots, helping overall volumes beat estimates by 14 percent.
Chief executive Stephen Elop is set to introduce a smartphone line based on Microsoft’s Windows Phone software at the Nokia World event in London next week. In moving to the new platform, the company accelerated the decline of the 10-year-old Symbian device family, which has been losing market share to Apple and Google.
“The good result in handsets is largely due to dual-SIM and channel replenishment in China,” Alexander Peterc, a London-based analyst at Exane BNP Paribas, said. “It’s a medium- to low-quality beat because the channel replenishment is a one-off, but encouraging for Nokia because it’s no longer making losses and burning cash.”
Nokia shares jumped as much as 11 percent to the highest level in almost five months in Helsinki trading. It traded at e4.86 as of 2.06pm local time, giving the company a market value of e18.2 billion.
Nokia said in February that the transition to Windows Phone as its main handset platform would start this year, with large volumes coming next year. Elop said yesterday that the company would start shipping this quarter and expand to more countries and carriers in 2012.
Third-quarter revenue declined 13 percent to e8.98bn. Nokia’s overall handset shipments slid 3 percent to 106.6 million units, while analysts had estimated sales of 93.6 million phones. Smartphone shipments still slumped 38 percent to 16.8 million units.
Apple sold 17.07 million iPhones in the third quarter. Last week, it set a record of selling more than 4 million iPhone 4S devices over the debut weekend. Nokia’s handset business had an operating margin of 4.1 percent adjusted for some items. The margin would be in a range of 1 percent to 5 percent this quarter, the company said yesterday.
“We started to see signs of early improvement in many areas,” Elop said. The quarterly results “indicate that our sales execution and channel inventory situation have improved”. The largest handset maker since 1998 with market share as high as 40 percent, Nokia had a 22.8 percent share in the second quarter, according to researcher Gartner.