Did Nokia Turn a Corner With These Results?
Nokia’s (NYSE:NOK) doomsayers may have to pull back their criticisms, at least for now; in the fourth quarter the Finnish cellphone manufacturer produced results that gave some hope for the company’s future profitability.
For the three-month period, Nokia generated a profit of 202 million euros ($269 million), a huge increase over the 1-billion-euro loss the company reported in the fourth quarter of 2011. But while profit rose, revenue dropped to 8 billion euros ($10.66 billion) from 10 billion in the year-ago quarter. Operating profit for the full year decreased to a 2.3 billion euro loss from a 1.1 billion euro loss in 2011.
Sales for the full year were even less encouraging. The company’s sales figures dropped 22 percent to 30.2 billion euros ($40.24 billion) from 38.7 billion euros last year, confirming that competition from Apple’s (NASDAQ:AAPL) iPhone and Google’s (NASDAQ:GOOG) Android devices remained tough. In particular, Nokia’s Devices & Services operation struggled. The unit reported that fourth-quarter revenue fell to 3.9 billion euros from 6 billion, with sales down 34 percent for the full year. Its Lumia smartphones, powered by Microsoft’s (NASDAQ:MSFT) Windows Phone 8, did well, selling 4.4 million units worldwide, but the company’s Smart Devices division sold only 6.6 million units, a 77 percent decline over last year…
Chief Executive Officer Stephen Elop limited himself to the positives in the earnings press release. “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,” he said. “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.”
Nokia announced some disconcerting news for shareholders as well. The company said Thursday that it does not plan to pay dividends for 2012 in an effort to improve its “liquidity position,” and it also gave a pessimistic guidance for the upcoming quarter. Nokia forecast that first quarter results will be “approximately negative 2 percent” because it expects “competitive industry dynamics to negatively affect the Mobile Phones and Smart Devices business units.”
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