Shares in Nokia, the former cellphone market leader which has tied its future to a smartphone collaboration with Microsoft, fell as much as 6 percent in Helsinki after the company reported a 20 percent decline in quarterly sales, to €5.9 billion, or $7.7 billion.
Nokia trimmed its quarterly loss to €272 million from €978 million a year earlier, and increased sales of its flagship Lumia Windows smartphones by 27 percent. Investors, however, focused on a weakness in sales of basic cellphones, which still makes up the bulk of Nokia’s business.
“Nokia has been a very jittery stock, and that is going to continue,” said Benedict Evans, an analyst at Enders Analysis in London. “The problem is that there is still some uncertainty about whether the company’s survival strategy will work, and the market is seizing on any evidence of success or a setback.”
Two years into Nokia’s smartphone collaboration with Microsoft, the Finnish company is steadily building sales of the Lumia line, but those gains have not offset the erosion in sales of its basic models. Nokia sold 55.8 million simple cellphones in the quarter, down from 70.8 million a year earlier, the lowest level in more than a decade, Mr. Evans said.
Stephen Elop, the Nokia chief executive, said concerns about the strength of the company’s turnaround were overstated, noting that Nokia’s financial results, and its smartphone business, showed continued signs of improvement.
“Yes, there are challenges, but we are actually pleased with the progress made so far,” Mr. Elop said in an interview.
With its latest results, Nokia has posted an operating profit in three consecutive quarters, Mr. Elop said. The expansion of the Lumia line bodes well for the future, which will increasingly be shaped by the smartphone business. In the first quarter, Nokia sold 5.6 million Lumia phones, up from 4.4 million in the fourth quarter.
The average selling price of a Nokia smartphone rose 34 percent in the quarter to €191.
In a conference call with investors, Mr. Elop, a former Microsoft executive, said he expected the rate of growth in Nokia’s smartphone sales to accelerate in the second quarter, with the pending introduction of a new model in the United States. Mr. Elop said Nokia planned to begin selling a new Lumia phone this month with a top U.S. operator, which he did not identify.
Carolina Milanesi, an analyst with Gartner in San Jose, California, said the unidentified provider was Verizon Wireless and that it would sell a top-of-the-line Lumia handset.
“This phone is going to have a major positive impact on Nokia because Verizon Wireless is the market leader,” Ms. Milanesi said. “This will significantly boost U.S. distribution.”
Nokia already sells co-branded Lumia phones through ATT and T-Mobile USA.
The Finnish company is also taking steps to shore up its basic cellphone business, Mr. Elop said. That part of the business has been shrinking as one in two global consumers of mobile phones buy smart devices, and low-cost Asian rivals, like MediaTek, are flooding China and India, two of Nokia’s traditionally strongest markets, with $20 cellphones.
Ms. Milanesi, the Gartner analyst, said she believes that Nokia’s turnaround is on track.
“Sure, Nokia needs to deliver improvements,” Ms Milanesi said. “But they need to do that profitably, which they are doing. This business won’t get turned around in a quarter. But it is moving in the right direction.”
Article source: http://www.nytimes.com/2013/04/19/technology/nokia-trims-its-loss-as-expected.html?partner=rss&emc=rss
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