June 16, 2024

Strong Earnings for Live Nation in Concert Season

Live Nation, the world’s biggest concert promoter and the owner of Ticketmaster, had $1.7 billion in revenue for the three months that ended in June, up 8.3 percent from the same period last year. The company’s net income was $59 million, or 30 cents a share, about 20 cents above analysts’ expectations.

Live Nation’s division that puts on concerts, its biggest business segment, had $1.2 billion in revenue, up 11 percent. In a conference call with investors, Michael Rapino, the chief executive, called the results “a set-up for what looks to be a record summer.” Concert ticket sales for the first six months of the year were up 26 percent from the same period of 2012, propelled by tours by Beyoncé, Rihanna and Kid Rock.

Closing at $16.32, Live Nation’s stock declined 1.86 percent for the day, but was up about 6 percent in off-hours trading. Since the beginning of the year, its stock price has grown more than 70 percent.

Live Nation profits from nearly every segment of the concert business, and is poised to capitalize on improved consumer discretionary spending. As a promoter, the company makes money when attendance is high at concerts and festivals, as well as from advertising and ancillary sales like food and parking; as a ticketer, it also collects a portion of the surcharges added to each ticket.

After years of steady growth, the concert industry was badly hit by the recession in 2010, but it has gradually recovered. Pollstar, a trade magazine, said that ticket sales for the top 50 tours was up 23 percent, to $1.8 billion, for the first half of the year.

One area of the music business in which Live Nation has been particularly aggressive is in the popular electronic dance genre. The company has bought several concert and festival promoters over the years, and says that it now has 17 festivals across the United States and Europe, which this summer it expects will draw 2.5 million people.

In the conference call, Mr. Rapino also confirmed one of the most closely watched deals in the concert business: Live Nation’s investment in Insomniac, the promoter behind the Electric Daisy Carnival series of dance festivals. When news of a possible deal emerged earlier this year, Live Nation was reported to have bought a 50 percent stake in Insomniac for somewhat less than $50 million.

Mr. Rapino did not give details about the transaction on the call. But in a filing on Tuesday with the Securities and Exchange Commission, Live Nation reported a good will charge of $48.1 million “primarily associated with the May 2013 acquisition of a controlling interest in a company that promotes festivals.”

Article source: http://www.nytimes.com/2013/08/07/business/media/strong-earnings-for-live-nation-in-concert-season.html?partner=rss&emc=rss

‘The Croods’ Helps DreamWorks Animation Increase Quarterly Profit

Glass half empty: The studio’s financial results are still being whipsawed quarter to quarter, and the underperforming “Turbo” is likely to cause headaches in the period ahead.

“The film’s soft opening is a clear result of an overly saturated marketplace and a difficult release date,” Jeffrey Katzenberg, the company’s chief executive, said of “Turbo,” which has taken in about $102 million worldwide after two weeks.

Mr. Katzenberg added, “Based on the data that we have to date, we do believe that ‘Turbo’ will be a profitable film for us.”

For the quarter, which ended on June 30, DreamWorks Animation reported net income of $22.2 million, or 26 cents a share, up from $12.8 million, or 15 cents a share, in the same period a year earlier. Analysts had been expecting 20 cents a share.

Revenue jumped to $213.4 million from $162.8 million, driven by $584 million in global ticket sales for “The Croods” and stronger-than-expected DVD sales of “Rise of the Guardians.” Shares of DreamWorks Animation rose more than 5 percent in after-hours trading, to about $26.

In a conference call with analysts Wednesday, DreamWorks Animation executives sought to underscore the work they were doing to diversify away from movies. They discussed new theme park deals with companies like SeaWorld; growth at their newly acquired YouTube channel, Awesomeness TV; expansion in original television programming, including the hiring of two senior Nickelodeon executives; and plans for a more robust toy and merchandise business.

Mr. Katzenberg said consumer products would soon start to become “an ongoing business as opposed to one that is simply event-driven.”

The studio has hired 35 people in its toy and merchandise unit since Jan. 1 and on Wednesday announced the arrival of a senior executive to lead “retail development and entertainment.”

Article source: http://www.nytimes.com/2013/08/01/business/media/the-croods-helps-dreamworks-animation-increase-quarterly-profit.html?partner=rss&emc=rss

Glaxo Chief Executive Addresses China Probe

The remarks, made during a conference call on the company’s second-quarter earnings, were the most extensive Mr. Witty has made about the scandal that his company is facing in China, where authorities have accused executives of using travel agencies to funnel illegal payments to doctors and government officials.

“I am very personally disappointed with these allegations that have been made,” Mr. Witty told reporters. “Clearly they are shameful allegations if they are true.”

He revealed few new details about the investigation, but said that the company was working with the Chinese government and that it has “opened up channels” with the British and United States governments. The company disclosed in 2010 that the United States was investigating Glaxo for possible violations of its overseas anti-bribery laws.

Mr. Witty said the ongoing Chinese investigation was likely to affect sales in the country but said it was too early to know specifics. “We continue to see the country as a key place for further investment,” he said.

The company posted second-quarter net income of 1.05 billion pounds, or $1.67 billion, on revenue of 6.62 billion pounds. That was a decrease from net of 1.24 billion pounds in the same quarter a year ago, but sales were up from 6.46 billion pounds last year.

Mr. Witty also sought to distance the company’s London headquarters from the scandal, saying that the central office “knew nothing” about the alleged fraud and that the executives accused of wrongdoing operated outside the company’s normal surveillance systems.

Since taking over as chief executive in 2008, Mr. Witty has tried to promote the company as a leader in ethical and transparent behavior. In 2012, Glaxo agreed to pay a fine of $3 billion to settle charges in the United States that it had improperly promoted its antidepressants and failed to report safety data about the diabetes drug Avandia

“To be crystal clear, we have zero tolerance for this kind of behavior,” Mr. Witty said. “I can assure you we are absolutely committed to rooting out corruption and we are also absolutely committed to getting to the bottom of what has happened here.”

The company’s response to the crisis has evolved considerably since reports of bribery first surfaced a few weeks ago. Glaxo officials initially stood by statements that the company had not engaged in wrongdoing, saying it had investigated the claims and found them to be without merit.

But it changed its tone after Chinese investigators raided company offices, detained four executives and went public with unusual detail about the practices they had uncovered. Mr. Witty dispatched top management to China to meet with investigators, and he acknowledged that some of the executives there may have broken the law.

Meanwhile, the inquiry has expanded to include other pharmaceutical companies. On Tuesday, AstraZeneca said some of its employees had been questioned in Shanghai, and Merck and Roche acknowledged over the weekend that they had used the same small travel agency that has been implicated in the Glaxo investigation.

Article source: http://www.nytimes.com/2013/07/25/business/global/glaxo-chief-executive-addresses-china-probe.html?partner=rss&emc=rss

DealBook: HSBC Profit Surges as Restructuring Plan Gains Traction

A branch of HSBC in London.Andy Rain/European Pressphoto AgencyA branch of HSBC in London.

8:42 a.m. | Updated

LONDON – Job cuts, asset sales and other cost reductions paid off for the British bank HSBC as it posted first-quarter earnings on Tuesday that beat analysts’ expectations.

Earnings at the bank rose almost 50 percent, to $8.43 billion, compared with the $4.32 billion the bank reported in the period a year earlier. Analysts polled by Thomson Reuters had expected a pretax profit of $8.1 billion.

“We’re moving into calmer waters but there are still challenges ahead,” HSBC’s chief executive, Stuart T. Gulliver, said during a conference call with reporters.

Like other banks, HSBC has embarked on a far-reaching cost-reduction program. Mr. Gulliver said that cost-cutting would remain on the top of the agenda this year, as the bank aimed to find an additional $1 billion in annual savings.

Operating expenses fell 11 percent, to $9.3 billion, from $10.4 billion in the first quarter of 2012, HSBC said in a statement. HSBC plans to update investors next week about its strategy and the progress it has made with its cost-reduction program.

Mike Jennings, chief investment officer of Premier, an investment firm in Britain, described the earnings as “good,” adding that the bank’s efforts to reduce costs had been better than expected. “They should be able to maintain a good rate of growth compared to competitors,” said Mr. Jennings, who holds HSBC stock as part of his portfolio.

Since it began a revamp in 2011, the bank has reduced costs by $4 billion, sold its unit in Panama to Bancolombia for $2.1 billion and its stake in the Chinese insurer Ping An for $9.4 billion. Last month, HSBC said it would eliminate about 1,150 jobs at branches in Britain, adding to the reduction of 30,000 positions two years ago.

A decline in bad debts also helped results. The bank had to set aside $1.2 billion for bad loans and other credit risks in the first quarter, half the $2.4 billion it did in the period a year earlier. The overall quality of the loans improved, especially in the United States and Europe, HSBC said.

Mr. Gulliver said on Tuesday that he could not rule out additional job cuts, as the economies in Britain and the rest of Europe continued to struggle. After a slower-than-anticipated start to the year, Mr. Gulliver said he expected economic growth in mainland China to gather speed in 2013.

HSBC’s first-quarter earnings were helped by its business in Asia, where it generates more than half of its profit. It also recorded better performance in Europe, swinging to a profit after posting a loss in the first quarter of last year. Going forward, however, Mr. Gulliver said he expected the euro zone would contract but that the United States economy would “continue to outperform its peers.”

Shares of HSBC rose 2.9 percent in London on Tuesday. The shares have gained 13 percent this year, less than shares in Barclays but more than those of Standard Chartered, which also generates most of its profit outside of Europe.

HSBC is recovering from a set of blunders that have weighed on its earnings and reputation. Last year, it agreed to pay a $1.92 billion fine to settle charges by American authorities that the bank broke money laundering rules. The case included charges that HSBC handled money transfers worth billions of dollars for countries under United States sanctions.

The bank has also set aside more than $2 billion to compensate customers who were improperly sold some financial products.

Article source: http://dealbook.nytimes.com/2013/05/07/hsbc-profit-surges-on-restructuring-plan/?partner=rss&emc=rss

European Troubles Lower Results for VW and Fiat

Until now, Volkswagen, the German auto company, had been buffered a bit more than other auto companies doing business in Europe because of its size and strong sales in North America and China.

But its shrinking profit margins reflect both the industry’s steep sales decline in Europe as well as intense price competition in the biggest vehicle segments.

Volkswagen joins a growing roster of foreign and United States automakers that are struggling in Europe, where car sales dropped 10 percent during the first quarter, including double-digit decreases in France, Germany and Spain.

Most automakers are banking on surging sales in the United States to offset some of these losses.

And VW’s chairman, Martin Winterkorn, cautioned that the company expected little improvement any time soon in Europe.

“The coming months will be anything but easy,” Mr. Winterkorn said in a statement. “The current environment is definitely a tough challenge for the entire industry.”

VW reported on Monday that its after-tax profit fell 38 percent, to 1.95 billion euros ($2.5 billion) in the first quarter, even though revenue slipped just 1 percent, to 46.6 billion euros.

The Italian automaker Fiat also reported a drop, reporting that its net profits plunged 88 percent during the three-month period, to 31 million euros ($40 million), and that revenue fell 2 percent, to 19.76 billion euros.

Fiat’s chief executive, Sergio Marchionne, said that the combination of pricing pressure and weak demand was likely to depress profits in Europe for some time. “It is unfortunate the European market is in this state,” Mr. Marchionne said Monday in a conference call with reporters and analysts.

He added that some automakers had considered themselves immune to the downturn, but no longer. “Those who have claimed a Teflon approach are getting that coat taken off,” he said.

Last week, the American automaker Ford reported a pretax loss of $462 million in Europe, and projected a full-year loss of $2 billion in the region. And the French carmaker PSA Peugeot Citroën said it expected losses to force new labor talks to cut costs and increase competitiveness.

With the European market in such a dismal state, most auto companies are counting on surging sales in the United States to generate the bulk of their future profits.

At Volkswagen, the company’s Audi luxury brand is the bright spot in its lineup. Audi, which has posted a 16 percent sales increase in the United States this year, contributed more than two-thirds of overall profits that VW earned in the first quarter.

Fiat has been getting virtually all of its profits from its Chrysler subsidiary in the United States.

Fiat took control of Chrysler after the American company’s government bailout and bankruptcy in 2009. Since then, the Italian automaker has accumulated a 58.5 percent stake in Chrysler, and they have begun developing vehicles together.

In the first quarter, however, Chrysler’s comeback stalled somewhat, as it spent heavily on new versions of two core products, the Jeep Grand Cherokee sport utility vehicle and a heavy-duty Ram pickup truck.

Chrysler said Monday that its net income fell 65 percent during the quarter, to $166 million, and revenue dropped 6 percent, to $15.4 billion.

Yet Chrysler still managed to help Fiat post a profit. Without Chrysler’s contribution to the bottom line, Fiat said it would have lost money during the period.

Mr. Marchionne, who is also chief executive of Chrysler, said he expected the American company to reach its full-year target of $2.2 billion in net income and revenue of $72 billion or more.

He said that the coming introduction of the new Jeep Cherokee S.U.V. this summer was “crucial” to hitting those goals.

“We need to do everything we can between now and then to make it happen,” Mr. Marchionne said.

He added that given the strength of the United States market, Chrysler should regain momentum with its new models. “The onus is on us,” he said.

Analysts said that Chrysler’s performance remained Fiat’s best hedge against the turmoil in Europe.

“Who would’ve guessed five years ago when Fiat rode to the rescue of a then-bankrupt Chrysler, that Chrysler would be viewed as the savior of Fiat?” asked Jack R. Nerad, an analyst with the auto research service Kelley Blue Book.

Mr. Marchionne also updated analysts Monday on the potential for Fiat to take full ownership of Chrysler.

“I have always seen Fiat and Chrysler being one entity at some point in time,” he said. “How we get there is a story that’s going to be written.”

Fiat hopes to buy the 41.5 percent stake in Chrysler owned by a health care trust for United Automobile Workers union retirees in the United States. But Fiat and the U.A.W. trust remain far apart on a price for the shares.

A federal judge in Delaware is considering different valuations proposed for the stock, and is expected to make a ruling on a fair price this summer.

Until the court case is resolved, Mr. Marchionne said a potential Fiat-Chrysler merger was temporarily delayed.

“I remain hopeful that we can find a solution that meets their objectives and ours,” he said.

If Fiat is successful in acquiring the shares owned by the U.A.W. trust, it could consolidate its balance sheet with Chrysler. Fiat could then gain access to Chrysler’s cash reserves to bolster its product lineup in Europe and elsewhere.

Once a Fiat-Chrysler merger is completed, Mr. Marchionne said the combined company would restructure itself and issue new shares to raise capital.

Fiat shares, like most Italian companies, are currently traded on the stock exchange in Milan. But Mr. Marchionne said new shares in Fiat-Chrysler would most likely be listed on the New York Stock Exchange.

“It’s the most efficient capital market I can get my hands on,” he said.

Article source: http://www.nytimes.com/2013/04/30/business/global/european-troubles-lower-results-for-vw-and-fiat.html?partner=rss&emc=rss

DealBook: Credit Agricole Cites Write-Downs in Posting a Record Loss

A branch of Credit Agricole in Marseille, France.Jean-Paul Pelissier/ReutersA branch of Crédit Agricole in Marseille, France.

PARIS — Crédit Agricole, one of France’s biggest lenders, said on Wednesday that a series of write-downs and other charges contributed to its largest-ever annual loss.

The bank reported a net loss of 6.5 billion euros ($8.7 billion) for 2012. In the fourth quarter, the bank posted a net loss of about 4 billion euros, compared with a loss of about 3.1 billion euros in the period a year earlier. Revenue fell 23 percent, to 3.3 billion euros, in the three months ended Dec. 31.

Jon Peace, an analyst at Nomura International in London, described the fourth-quarter loss as “an even bigger kitchen sink” than that for which the market had been bracing, but said Crédit Agricole’s core French retail and asset management businesses had performed surprisingly well. There are “clear signs of improvement” in its finances, he wrote in a note.

“We are turning a page and will develop a new medium-term plan this year,” Jean-Paul Chifflet, the bank’s chief executive, said in a statement. “It will show that we are moving forward on solid foundations.”

After stripping out one-time costs, the bank said net income showed “the resilience of French retail banking and a good performance in savings management, the group’s core businesses.” The bank’s adjusted fourth-quarter net income was about 548 million euros, up 10 percent compared with the last three months of 2011.

Jean-Paul Chifflet, the chief executive of Crédit Agricole.Jacky Naegelen/ReutersJean-Paul Chifflet, the chief executive of Crédit Agricole.

Mr. Chifflet said in a conference call that the bank would not need to raise capital in the financial markets. Shares of Crédit Agricole rose 7.6 percent in afternoon trading in Paris on Wednesday.

The flood of red ink originated in good-will impairments of nearly 2.7 billion euros, losses linked to the sale of its C. A. Cheuvreux brokerage unit to Kepler. The charges take into account the decline in value of the unit.

The impairment comes as banks face pressure over good will.

Last month, the European Securities and Markets Authority called on companies to take a hard look at the value they assign to the assets on their balance sheets, particularly those they purchased in more favorable times. It warned that it would publicly identify those companies that failed to comply.

Crédit Agricole also booked a fourth-quarter charge of 706 million euros related to the sale last year of its Athens-based unit, Emporiki, to Alpha Bank, a write-down that it said left it with no residual exposure to Greece. But it said the French tax authorities had unexpectedly ordered it to pay a bill of 838 million euros on the disposal, causing its loss to grow.

Fourth-quarter results also were hurt by a charge of 541 million euros on the cost of revaluing the bank’s own debt.

Crédit Agricole, based in Paris, was caught flat-footed when the euro zone crisis caused a sharp fall in the value of assets in Greece, Italy and other struggling European countries.

Over the last few years, the bank has been streamlining its business and reducing its reliance on so-called peripheral European economies, as well as increasing its capital buffer.

Crédit Agricole said its core Tier 1 ratio, a measure of a bank’s ability to weather financial shocks, under the accounting rules known as Basel III, stood at 9.3 percent at the end of December, and that it hoped to exceed 10 percent by the end of 2013.

This post has been revised to reflect the following correction:

Correction: February 21, 2013

An earlier version of this article erroneously reported the size of the unexpected tax bill that Crédit Agricole bank had to pay on the disposal of its Greek unit, Emporiki. It was 838 million euros, not 132 million euros. The article also misstated the negative impact of that bill on the group’s fourth-quarter net income. It was 706 million euros, not 704 million euros.

A version of this article appeared in print on 02/21/2013, on page B2 of the NewYork edition with the headline: Crédit Agricole Cites Write-Downs in Posting a Record Loss.

Article source: http://dealbook.nytimes.com/2013/02/20/credit-agricole-posts-record-loss-on-write-downs/?partner=rss&emc=rss

I.S.M. Reports Slower Growth at Services Companies

WASHINGTON (AP) — Growth at service companies slowed slightly in January as a result of weaker new orders and slower business activity. But hiring improved, providing a bright sign for the economy.

The Institute for Supply Management said Tuesday that its index of nonmanufacturing activity dipped to 55.2 in January. That was down from 55.7 in December, which was the highest level in nearly a year. Any reading above 50 indicates expansion.

The modest decline from December’s strong reading suggests the industry was not greatly hampered by an increase in Social Security taxes that reduced take-home pay for most Americans.

Companies did not single out the rise in payroll taxes in the survey, Anthony S. Nieves, chairman of the I.S.M.’s survey committee, said in a conference call with reporters.

The report measures growth in industries that cover 90 percent of the work force, including retailing, construction, health care and financial services.

Over all, economists were encouraged by the steady reading in the services index, as well as a sharp jump in the institute’s January manufacturing index released last week. The reports suggest economic growth is rebounding in the quarter from January to March, after shrinking from October to December.

A gauge of hiring in the services report rose to its highest level in nearly seven years. That was consistent with the solid job gains reported by retailers, construction companies and other service firms in the government’s January employment report, released last week.

Service and construction companies have added an average of nearly 195,000 jobs a month in the last three months. The increase in the employment gauge suggests the solid hiring will continue.

Paul Dales, an economist at Capital Economics, attributed the dip in the overall I.S.M. index to the Social Security tax increase. “But this blow has been small and cushioned by stronger demand in other sectors, namely construction,” he said.

Article source: http://www.nytimes.com/2013/02/06/business/economy/ism-reports-slower-growth-at-services-companies.html?partner=rss&emc=rss

Investors Shrug Off a Weak Earnings Report From Amazon

Investors decimated Apple last week when it appeared that the world’s mightiest profit machine might be slowing down just a tad. But they cheered on Tuesday when Amazon said its fourth-quarter sales and earnings fell short of expectations. Oh, and expect a miserable first quarter, too.

Shares in Amazon immediately jumped nearly 10 percent in after-hours trading, about the same amount that Apple fell after releasing its news.

What caught the eye of investors was that operating margins as a percent of consolidated sales rose to 3.2 percent, from 2.7 percent a year ago.

“The carrot for Amazon investors is improvements to margin over time,” said Gene Munster, an analyst with Piper Jaffray. Apple, on the other hand, would need to build a cheaper iPhone to keep growing as fast as it has been, which would slice into its margins.

For more than a decade, Amazon has teetered between minimal profits and no profits. In 2012, it said Tuesday, it lost money. But Wall Street has always been more about promises than results, and Amazon is always on the verge of converting its overwhelming online presence into buckets of cash.

“As long as the dream is there, the stock is going to go up,” Mr. Munster said.

The short-term news Tuesday was not good. Earnings per share fell to 21 cents from 38 cents in the fourth quarter of 2011. Although fourth-quarter revenue went up 22 percent to $21.27 billion, both revenue and earnings did not meet expectations. Analysts had predicted revenue of $22.2 billion and earnings of 27 cents a share.

Forget about all that. What mattered was the improvement in margin.

Amazon has had plenty of opportunities to raise its margins in the past, but has instead routinely chosen to reward customers with subsidized shipping and higher discounts. In a conference call with analysts on Tuesday, Tom Szkutak, Amazon’s chief financial officer, repeated this mantra.

“Putting customers first is the only reliable way to create lasting value for shareholders,” he said.

Investors took some time to buy into this idea. “Wall Street gets in a kerfuffle when we lower product prices and invest heavily in the future,” Jeff Bezos, Amazon’s chief executive, acknowledged in 2005, at a point when the stock had tumbled 40 percent in less than a year. “So don’t buy our stock — instead buy our products and enjoy our investments.”

That was bad advice. The stock is up almost 700 percent since then, hitting a record this month.

Shares in Amazon fell nearly $16 in regular trading Tuesday, to $260.35. After-hours, shares went up more than $22.

Jason Moser, an analyst with the Motley Fool, who owns shares in the retailer, said that “many investors, myself included, will more than likely watch this story play out for as long as it takes.”

Mr. Moser added in an e-mail message that the market was “betting a lot on what Amazon hasn’t done yet and betting on the fact that it will do it based on what it’s doing now.” He added, “Kind of a ‘build it and they will come’ sort of thing.”

Some analysts are still skeptical.

“It’s much easier to sell goods at cost the way Amazon does than sell goods at a 40 percent margin like Apple,” said Colin Gillis of BGC Partners. “Once you’ve trained your customers to buy at cost, it’s difficult to train them away from it.”

Still, Mr. Gillis said: “Who’s going to undercut Amazon? They’re only making half a cent on every dollar. Who can run a business at less profit?”

Amazon continues to expand. Last year, the retailer announced it was building a million-square-foot warehouse in Patterson, Calif., about 85 miles southeast of San Francisco. Last week, it announced another million-square-foot warehouse barely 30 miles north of Patterson, in Tracy. It obviously has designs on fast (if not quite same-day) shipping to the seven million generally affluent, Internet-using residents of the Bay Area.

“We’ll continue to expand our footprint over time and become even closer and closer to customers,” Mr. Szkutak said on the conference call.

Many of those shoppers will be buying material that originated not with Amazon but with more than two million third-party sellers. The volume of items sold by these firms during the 2012 holidays was up 40 percent from 2011. Some of these sellers merely used Amazon to digitally display their goods, while others also used the retailer to ship it.

Amazon said earlier this month that third-party sellers sold enough Santa hats during the holiday for Santa to wear a new hat every day for the next 127 years, and enough guitar picks to give one to every attendee of Woodstock — about a half-million. Analysts expect third-party sales to outpace Amazon deals over the next few years.

Recently several states, including California, successfully made deals with Amazon to collect sales tax. That had the effect of raising prices on many Amazon items by more than 5 percent. Land-based retailers, which had agitated for years for such a move, thought the tax might finally level the playing field.

Their hopes might be misplaced. Any drop in online sales from the collecting of sales tax tends to be temporary, said Scot Wingo, chief executive of ChannelAdvisor, which helps retailers sell online, including on Amazon.

Article source: http://www.nytimes.com/2013/01/30/technology/amazon-earnings.html?partner=rss&emc=rss

Nokia Reports Profit but Fails to Soothe Investors

The company, based in Espoo, Finland, said it had a profit of €202 million, or $269 million, in the three months through December, after a loss of €1.1 billion a year earlier. Sales fell 20 percent, to €8 billion from €10 billion, as it phased out an older line of smartphones that used the Symbian operating system.

The company’s shares fell 5.5 percent in trading in Helsinki, closing at €3.30, as Nokia announced that it would not pay a dividend for 2012, which would save the company about €750 million. It was the first time Nokia had not paid a dividend in recent memory, according to the company.

Mats Nystrom, an analyst at SEB Enskilda Bank in Stockholm, said that Nokia had raised investor hopes this month when it said it would report a quarterly profit, but that the company had not met those expectations with results that showed less-than-expected growth in the average selling price of the Lumia smartphone line and falling cellphone prices.

“I still think it is far from a certainty that this turnaround will be a success,” Mr. Nystrom said.

During a conference call with journalists, the Nokia chief executive, Stephen Elop, challenged that notion, saying the company had successfully eliminated investor concerns about its future. Nokia’s net cash on hand at the end of December, bolstered by the decision to forgo a dividend payment, rose to €4.4 billion from €3.6 billion in September.

“For investors, it was a solid quarter in which we removed concerns about our cash situation,” said Mr. Elop, a former senior executive at Microsoft. Over the past year, he has closed factories across Europe and eliminated 16,500 workers from Nokia’s phone business.

The quarterly net profit was the first since Nokia announced its alliance with Microsoft in February 2011, which set off a turbulent transition that led to about €5 billion in combined losses, the laying off of a third of the company’s work force and a steep decline in its market share in smartphones, the industry’s defining segment.

While sales of Nokia’s new Lumia line, which uses the Microsoft Windows Phone operating system, are accelerating, to 4.4 million units in the fourth quarter from 2.9 million in the third, the company remains a distant challenger to the industry leaders, Apple and Google, whose Android operating system is now running nearly two-thirds of all new smartphones sold around the world.

Apple sold more than 10 times the number of iPhones during the fourth quarter, 47.8 million, and sales of Android smartphones, according to International Data Corp., reached 136 million in the third quarter. But as the largest maker of smartphones running Microsoft’s new Windows Phone 8, Nokia can build on its gains.

“This is really the time now for Nokia to put up results,” said Francisco Jeronimo, an analyst for International Data Corp. in London. “They are almost exclusively out there with Windows 8, and Microsoft is strongly promoting the operating system. There can be no more excuses now.”

In North America, Nokia increased its sales of cellphones by 40 percent in the fourth quarter to 700,000 units, up from 500,000 in the third quarter. Mr. Jeronimo said those results were weak considering the sizable marketing investment in the United States and Canada by Nokia and Microsoft on Windows 8.

Nokia’s share price has fallen by more than half during its software alliance with Microsoft. The shares have risen about 12 percent this year.

In the fourth quarter, Nokia’s profit was fueled by continued cost-cutting and the introduction of the Lumia 820 and 920 smartphones running Windows Phone 8.

The new handsets helped Nokia raise the average selling price of Lumia phones in the quarter to €186, up 33 percent from €140 in the quarter a year earlier. But the average price of Nokia’s basic cellphones, which still make up almost two-thirds of its total phone sales, fell 3 percent, to €31 from €32.

Article source: http://www.nytimes.com/2013/01/25/technology/nokia-shows-a-profit-but-shares-drop.html?partner=rss&emc=rss

2 Years Into Its Turnaround, Nokia Shows Promise

Mr. Elop, an affable Canadian engineer, painted the bleak outlook as he prescribed a radical cure on the once-proud Finnish mobile phone pioneer: The rejection of the company’s own Symbian smartphone operating system for a shotgun collaboration with Microsoft, itself stumbling badly in the sector.

On Thursday, the Nokia chief executive delivered the biggest news from the Finnish company since he started the last-ditch transformation: Nokia may be on its way back.

Thanks in part to an all-out marketing push, sales of its new smartphone line, the Lumia, powered by Microsoft’s Windows Phone operating system, soared more than 50 percent in the fourth quarter of last year, leading Nokia to an unexpected profit. Thanks largely to demand for its newest models, Nokia had to correct its financial forecasts — upward.

In what was seen as a make-or-break quarter, Mr. Elop was able to tell investors that Nokia would break even or turn a 2 percent profit rather than report a loss as large as 10 percent.

“While we definitely experienced some tough challenges in the first half of 2012, we are managing through these issues,” Mr. Elop said during a conference call with journalists.

What Nokia has accomplished under Mr. Elop, whose professional future is tied to resuscitating the company, is to produce a line of increasingly competitive smartphones that are starting to draw favorable comparisons with Samsung and Apple, the two companies most responsible for knocking Nokia from its lofty perch, according to analysts.

“The Lumia smartphones are night-and-day different from Nokia’s old Symbian handsets,” said Francisco Jeronimo, an analyst in London at International Data Corp. “I think what we are starting to see now is what will be a steady turnaround in Nokia’s fortunes.”

The company, which dominated the cellphone business until Apple introduced its iPhone in 2007, still has a long way to go to approach its former stature. In the third quarter, Nokia had just a 4 percent share of the global smartphone market, and was a distant No.10 in the sector, trailing the not-so-illustrious likes of LG and ZTE, among others, according to Strategy Analytics, a research firm.

Samsung and Apple, the No.1 and No.2 smartphone makers, together had 50 percent of the global smartphone market, and their shares were growing. While its competitors rose, Nokia has generated nearly €5 billion, or $6.5 billion, in losses under Mr. Elop, and eliminated of a third of its work force.

In October, Microsoft introduced the Windows Phone 8, the operating system that would be used in the top-of-the-line Lumia 920 and 820. Since then, Nokia has spent heavily on advertising in Britain and Europe to promote the models. The company will not disclose how much it had spent on its campaign, but its television ads were ubiquitous over the holidays, said Neil Mawston, an analyst at Strategy Analytics in London.

The heavy promotion, which was aided by Microsoft, whose own mobile strategy is intimately tied up with Nokia’s, has helped the company recapture some of its lost glory, Mr. Mawston said.

But Mr. Mawston warned that “Nokia still lacks the true killer phone that will enable it to compete with the iPhone 5 or Samsung Galaxy S III.”

Mr. Mawston said he expected Nokia’s share of the global smartphone market to rise to 6 percent by the end of the year.

The company’s financial position is likely to revive even more quickly as a result of the strict cost-cutting imposed by Mr. Elop, who used to run Microsoft’s business software division before coming to Nokia in late 2010.

Mr. Elop has eliminated a third of Nokia’s work force and shut factories across Europe. Last month, Nokia even sold its 540,000 square-foot, or 50,000 square-meter, glass-and-wood headquarters in the Helsinki suburb of Espoo to Finnish investors, and leased it back. The maneuver netted Nokia €170 million.

Besides a more competitive array of phones, Nokia has discarded its market-leader mentality. Employees are now routinely traveling in economy class and sharing rides to airports. Workers no longer use costly telephone conference calling but speak in group teleconferences using less expensive Internet calling services.

“The company is a lot smaller now but people are working better together,” said Susan Sheehan, a Nokia spokeswoman. “Everyone has been pitching in.”

Even at Nokia Siemens, the company’s long-suffering network equipment venture, the future is looking brighter than it was two years ago. On Thursday, Nokia said the unit, which contributes about 40 percent of its total sales, would report an operating profit for the third quarter, its third straight quarterly profit.

Nokia, in its information to investors, even revised the operating profit forecast at the venture to 13 percent to 15 percent of sales, up from a range of 4 percent to 12 percent.

Looking ahead, Nokia said it expected to return to an operating loss of 2 percent of sales in the first quarter amid the post-holiday buying lull and harsh competition. But the results for the coming three months could vary widely, Nokia warned, from an even bigger 6 percent operating loss to a 2 percent profit.

Pete Cunningham, an analyst at Canalys, a research firm in Reading, England, said that Nokia’s improving financial position was a positive step but that the company still faced challenges.

“On face value, this is a positive for Nokia,” Mr. Cunningham said. “But 2013 could still turn out to be another very difficult year for Nokia. It is way too premature to say that the company has made a turnaround.”

Mr. Cunningham said he used the Lumia 920, Nokia’s newest smartphone, during the Christmas holidays and liked the experience.

“But the more I used the phone, the more apparent it became to me that there are big gaps between Lumia and its competitors in terms of the functionality and usability of its apps,” Mr. Cunningham said. “I still think there is a lot of work to be done on Lumia.”

Article source: http://www.nytimes.com/2013/01/11/technology/nokia-sees-results-from-new-smartphone-line.html?partner=rss&emc=rss