Nokia posts loss, future hinges on new Lumia sales

HELSINKI (Reuters): Nokia reported another quarterly loss last Thursday and warned of more tough times ahead, raising the stakes for smartphone launches next month aimed at clawing back market share lost to Apple and Samsung.

Once the world’s biggest mobile phone maker and a trailblazer in the sector, the Finnish firm has fallen behind Apple’s iPhone and Samsung’s Galaxy phones in the lucrative smartphone market.

Nokia reported an underlying loss for the third quarter of 0.07 euros per share before one-off items, compared with a profit of 0.03 euros a year earlier.

This marked the third straight quarter of underlying losses but was better than the market’s average forecast of a 0.11 euro loss, thanks to strong profits at its telecoms equipment venture Nokia Siemens Networks. However, pressure was still growing on Chief Executive Stephen Elop, who was hired in 2010 to turn the company around.

Nokia is pinning its hopes on the new Lumia 820 and 920 models, which come in vivid colours, have high-resolution cameras and are due to hit the stores in November. The phones run on new Windows Phone 8 software, part of Elop’s strategy switch in February 2011 to scrap Nokia’s own software in favour of Microsoft’s.

Nokia has been cutting jobs, slashing spending in marketing and research, and selling assets such as its Vertu luxury handset unit to improve its finances. But a big drop in sales has been draining its cash reserves.

Its net cash fell to 3.6 billion euros ($ 4.7 billion) from 4.2 billion in June, although it was higher than market forecasts of 3.4 billion euros.

In the third quarter, sales of the existing range of Lumia smartphones fell to 2.9 million from four million in the second quarter. Average selling prices dropped to 160 euros from 186 euros per phone.

Sales of mid-range feature phones rose from the previous quarter, helped by the new Asha models, but Nokia’s long-term survival is seen as dependent on higher-margin smartphones.

Nokia said the fourth quarter would be challenging as it starts to roll out the Lumia 820 and 920, and investors also expect a tough time.

The pre-holiday shopping season is crucial for mobile phone makers, and the new Lumias will face strong competition from Apple’s new iPhone 5 and Samsung’s Galaxy SIII.

The new Lumias will also be competing with new tablets this Christmas, including Apple’s new mini iPad which is expected to be launched next week.

Underlying operating profit at NSN jumped to 323 million euros from six million a year earlier, with cost cuts and rising sales helping to beat all analysts’ expectations in the Reuters poll. The venture is in the midst of chopping annual costs by one billion euros, including 17,000 job cuts.