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Nokia's Q4 'beat expectations' despite ongoing sales slump

Investors desperate for good news got some

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Nokia announced preliminary financial results for its fourth quarter of 2012 on Thursday, claiming that its smartphone business had "exceeded expectations," despite the fact that overall sales are still trending downward.

The struggling mobile maker said its Devices & Services division sold 86.3 million devices in the quarter, for a net sales total of €3.9bn, which the company said beat its own earlier estimates.

Smart devices accounted for around €1.2bn of those sales, with Nokia shipping 6.6 million units in the quarter, two-thirds of which were Lumia smartphones.

But the lion's share of the sales – €2.5bn – came from Nokia's other lines of low- to midrange mobes, including its Asha line of smartphones and feature phones. The company said that out of a total of 79.6 million handsets sold, 9.3 million were Asha full touch smartphones.

Some of the other phones sold were Symbian devices, but that aging OS represented a smaller share of the total than ever before. Nokia sold just 2.2 million Symbian phones in the quarter, which was less than it sold of either its Asha or its Lumia lines.

"We focused on our priorities and as a result we sold a total of 14 million Asha smartphones and Lumia smartphones while managing our costs efficiently," Nokia CEO Stephen Elop said in a statement, adding that Nokia Siemens Networks also had a good quarter.

While all of this sounds encouraging, however, much was left unsaid, and not all of what was disclosed was wholly positive.

Although Nokia says it saw "better than expected financial performance" in its Devices & Services business, the division's overall sales were down from the equivalent quarter in 2011. Net sales were down 35 per cent from the €6bn Nokia pulled in during Q4 2011, and the number of units shipped was down 24 per cent from that quarter's 113.5 million–unit volume.

That's a slump from previous years, too. From 2010 to as far back as 2008, when Nokia first started breaking out its sales the way it does now, Devices & Services regularly saw net sales exceed $8bn in the fourth quarter. Looks like those days are over.

And while Nokia won't share any profit figures until it releases its formal earnings statement on January 24, those numbers aren't likely to impress, either. Devices & Services' non-IFRS operating margin was 4.9 per cent in the fourth quarter of 2011, but Nokia says to expect it to be no higher than 2 per cent this quarter.

And as for next year? Nokia says the division's operating margin will probably be around negative 2 per cent, "plus or minus four percentage points" – hardly reason to celebrate.

Still, investors were willing to overlook the bad and seemed pleased with what came across as a generally positive announcement from long-suffering Nokia. The company's shares surged 18.67 per cent on the news, to close at 4.45. ®

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