Nokia's Ugly Lumia Truth In $1 Billion Loss

Nokia recorded a loss of $1 billion on combined smartphone sales of 10.2 million--only 600,000 of which were shipped in the U.S.

Eric Zeman, Contributor

July 19, 2012

3 Min Read
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Windows Phone 8 Preview: A Visual Tour


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Windows Phone 8 Preview: A Visual Tour

Nokia's long road to recovery continues to be a tough one. The Finnish phone maker reported its second quarter earnings Thursday, which showed the company lost a record $1 billion on net sales of $9.22 billion. Despite the huge loss, Nokia managed to hold onto $5.2 billion in cash. Nokia's share price, however, is down 80% since February 2011, which is when it announced its plans to switch to Microsoft's Windows Phone platform. How has that worked out for Nokia so far?

Looking at the company's sales of mobile devices for the second quarter of 2012, it moved a total of 83.7 million cellphones. That's up from 82.7 million during the first quarter and includes sales of smartphones in addition to low-cost feature phones. The average selling price of all devices was $59, down from $63 in the previous quarter.

Just over 12% of Nokia's device sales, however, were smartphones. The company sold 73.5 million feature phones. Combined sales of Symbian and Windows Phone devices slipped from 12 million in the first quarter to 10.2 million in the second quarter. The average selling price of Nokia's smartphones rose 6% quarter-over-quarter from $176 to $185.

Breaking down Nokia's smartphone sales, 4 million of them were Lumia Windows Phones and 6.2 million of them were Symbian devices. The number of Lumia devices shipped doubled quarter-over-quarter, up from 2 million. The number of Symbian smartphones shipped dropped dramatically from 10 million to 6.2 million.

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Both these changes make sense when you look at the devices that Nokia introduced this year. Both the Lumia 900 and Lumia 610 were announced during the first quarter, but went on sale in the second quarter. With four Windows Phone devices now in the market, it's no surprise that Nokia's Lumia device sales doubled when compared to the first quarter. One of the only Symbian devices introduced this year, the Nokia 808 PureView, went on sale in world markets during the second quarter, as well. It joins an existing roster of Symbian devices that are still on store shelves.

Perhaps the most depressing metric offered by Nokia is the breakdown of smartphone sales in the United States. Nokia sold only 600,000 smartphones in the U.S. during the second quarter. That includes the Lumia 710 from T-Mobile and the Lumia 900 from AT&T. Nokia didn't break down specific handset sales any further, but it is safe to say that the 900 likely outsold the 710 by a significant margin in the second quarter, as the 710 has been for sale since January. The Lumia 900 cost $100 when it went on sale, but the price recently dropped to $50.

Nokia CEO Stephen Elop didn't say much about the supposed "contingency plan" that the company has in the works should its Windows Phone strategy fail, but he did say that it expects a surge in sales once Windows Phone 8 devices become available.

Until then, Nokia hopes that the Lumia 900 and Lumia 610 will keep it afloat for a few months, even though neither device will be upgraded to Windows Phone 8. The company predicted a tough third quarter ahead.

About the Author

Eric Zeman

Contributor

Eric is a freelance writer for InformationWeek specializing in mobile technologies.

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