Struggling former handset king Nokia may have a comeback in its future, based on preliminary numbers for the just-concluded fourth quarter of 2012 that show its Windows-based Lumia handsets are a hit.
The company expects to show handset revenues that either broke even or yielded a 2 percent profit, rather than an anticipated 6 percent loss. But Stephen Elop, the American CEO of the Finland-based company, cautioned that the current quarter, a time when sales generally slump after the holiday sales boost, could see a margin of negative 2 percent, give or take four percentage points. Full results will be announced Jan. 24.
"Q1 is seasonally weak for both devices and for NSN," Elop said in a conference call with reporters and investors Thursday (Jan. 10). He was referring to Nokia Siemens Networks, the company's joint venture with Germany's Siemens for data networking and telecommunications equipment. "Additionally, we continue to operate in a competitive environment with limited visibility."
But Elop, joined by CFO Timo Ihamuotila and Matt Shimao, head of investor relations, boasted that the company's strategy of phasing out its own Symbian platform for Microsoft's Windows Phone operating system was paying off and helping the company stay competitive against Apple's iOS and Google's Android products.
Sales of Lumia handsets, powered by Microsoft's Windows Phone 7 and Windows 8, reached 4.4 million in the quarter, up sequentially from 2.9 million in Q3.
"Our team has outlined the top priorities and we are pleased that these have started to translate into results," Elop said. Ihamuotila said the 2.2 million Symbian handsets sold during the quarter likely represented "the last quarter when we will have a meaningful Symbian volume."
Supply and Demand
In response to a question, Elop declined to break down sales of Windows 7 and Windows 8 devices sold, noting that two devices running 7.5 were introduced during the quarter as well as seven Windows 8 devices. "We expect Windows Phone 7 to decline over time as Windows 8 accelerates," the CEO said.
He said supply constraints prevented what could have been even higher growth and that Nokia hadn't been able to discount its devices as easily as rivals.
"Other parties may be making decisions to drive traffic or to change behavior....But broadly speaking, this hasn't been a price discounting environment."