Nokia Oyj, the Finnish mobile-phone maker attempting a comeback, reported revenue that missed analysts’ estimates as handset sales volumes plunged 27% on intensifying competition across the market.
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Second-quarter sales fell 24% to 5.7 billion euros (US$7.5 billion), Espoo, Finland-based Nokia said today. Analysts projected 6.4 billion euros, the average of estimates compiled by Bloomberg. While sales of the Lumia smartphone line rose to 7.4 million units, demand for older and more basic phones fell.
Nokia has lost more than 5 billion euros in nine quarters as Chief Executive Officer Stephen Elop’s comeback bid hasn’t reversed market-share declines. Nokia’s basic mobile phones are losing users to Chinese rivals and its new smartphones, including the Lumia 1020 with a 41-megapixel camera unveiled last week, have failed to stop shoppers from picking up Samsung Electronics Co. and Apple Inc. phones.
Nokia must focus on “improving the competitiveness and innovation of our products while we manage our costs and keep moving with urgency,” Elop told reporters on a conference call.
Nokia fell 5.2% to 2.94 euros at 2:04 p.m. in Helsinki. The stock plummeted 22% last year, its fifth straight annual drop, and had gained 5.9% this year through yesterday.
Net loss narrowed to 227 million euros from 1.4 billion euros a year earlier. Analysts projected a loss of 258.8 million euros.
Nokia joins rivals such as BlackBerry and Samsung in reporting results trailing estimates, signaling a slowing market as an increasing number of users in more developed countries have already upgraded to smartphones.
Sales volumes of both basic phones and smartphones fell 27%, Nokia said. Basic-phone sales were 53.7 million, missing the 54.4 million projected by analysts surveyed by Bloomberg.
Sales of the Lumia smartphones, which run Microsoft Corp.’s Windows software, climbed 32% from the first quarter. Analysts projected Lumia volumes of 7.8 million units.
The operating loss at Nokia’s mobile devices business, excluding some items, was equivalent to 1.2% of sales. Analysts projected 2.2% on average. This quarter, that margin will be between minus 6 and positive 2, Nokia predicted.
One of the first smartphone makers, Nokia dominated with a global market share topping 50% before Apple’s iPhone and Google Inc.’s Android software were introduced about six years ago. Nokia’s market share has since collapsed to about 3%, according to IDC. The slump has pushed Nokia to losses and forced it to cancel its dividend for the first time in at least 143 years.
Similarly to Nokia, Canada’s BlackBerry has also struggled to challenge Apple and Samsung. The company missed analysts’ estimates for phone shipments and profit for the latest quarter, sending its stock down the most in 13 years.
Samsung, the world’s largest smartphone maker, this month reported quarterly operating income of about 9.5 trillion won ($8.3 billion). That missed the 10 trillion-won average estimate.
Nokia’s net cash fell to 4.1 billion euros at the end of the quarter from 4.5 billion euros in the first quarter. Its debt rating was cut this month one step deeper into junk by Standard & Poor’s, which said the handset maker’s net cash may tumble after a deal to buy Siemens AG’s share in their six-year old mobile-equipment venture for 1.7 billion euros.
Nokia Siemens reported a second-quarter operating profit of 8 million euros as sales fell 17% to 2.78 billion euros.