Nokia posts big losses as smartphone sales dip

The decline of once great mobile giant Nokia continued today as it posted an operating profit decline of 41 per cent, year-on-year, and losses of 368 million (325 million).

In the second quarter of 2011, Nokia saw its smartphone sales drop 32 per cent, with overall mobile sales falling 20 per cent.

The company sold 16.7 smartphones in the quarter, compared to 25.2 million in the same period in 2010.

Net sales overall fell seven per cent, even as the company looks to make sweeping changes in order to reestablish itself as a contender in the market, where it is up against the likes of Apple, Samsung and Google.

We said things would get worse before they would get better and that is exactly what happened.

Earlier this week, Apple beat market expectations in its quarterly results, largely thanks to significant iPhone sales. Apple sold 20.34 million iPhones during the quarter.

Nokia chief executive (CEO) Stephen Elop said the results were "clearly disappointing."

"However, even within the quarter, I believe our actions to mitigate the impact of these challenges have started to have a positive impact on the underlying health of our business," Elop said.

"Most importantly, we are making better-than-expected progress toward our strategic goals."

The company has yet to release a Windows Phone 7 device, since announcing the move away from Symbian in February. One is expected to appear before the end of the year, but no date has been set.

"Those who already have viewed our early Windows Phone work are very optimistic about the devices Nokia will bring to market and about the long-term opportunities," Elop said.

"Step by step, beginning this year, we plan to have a sequence of concentrated product launches in specific countries, systematically increasing the number of countries and launch partners."

Gartner analyst Carolina Milanesi said the sales were much lower than she had anticipated, meaning Nokia could fall to the third biggest supplier of smartphones in the world, behind Apple and Samsung.

"Q2 needs to be the bottom of the barrel for Nokia with some positive impact of the new products coming in Q3. We said things would get worse before they would get better and that is exactly what happened. Question is when are they going to get better? We do not believe they will materially improve before the second half of 2012," Milanesi told IT Pro.

"I don't think Nokia had any other option than go with Microsoft. The OS and Nokia's hardware plus the potential that they have shown on UI with the N9 gives me confidence. Their biggest challenge will be getting the wow' back in the brand."

Earlier this year, Nokia shocked onlookers by completely cancelling its 2011 outlook due to negative impacts on its devices and services division.