Nokia has posted an operating loss of €576m (£467m) as the struggling Finnish manufacturer struggles to reverse its fortunes.
CEO Stephen Elop blamed the slump on the announcement of the Nokia Lumia 920 and Lumia 820 and said that the company had managed through a “tough transitional quarter.” However the losses were not as bad as previous quarters.
Sales of Lumia handsets plummeted to just 2.9 million, down from 4 million in the previous quarter as consumers delayed purchases ahead of the launch of smartphones running the Windows Phone 8 operating system.
Exacerbating the problem was the fact that smartphones running Windows Phone 7, such as the Lumia 900, can’t upgrade to the latest version when it is released.
As losses mounted, Nokia’s cash reserves fell by €633 million (£514m) to €3.65 billion (£2.961bn) during the quarter, but Elop remains confident of turning things around.
“While we continue to focus on transitioning Nokia, we are determined to carefully manage our financial resources, improve our competitiveness, return our Devices & Services business to positive operating cash flow as quickly as possible, and ultimately provide more value to our shareholders,” he said.
However the fourth quarter, traditionally a strong period for smartphone sales ahead of Christmas, might not necessarily be as lucrative as could be expected for Nokia. It said it expects it to be “a challenging quarter” with “a lower-than-normal benefit from seasonality in volumes.”
Nokia announced its first Windows Phone 8 smartphones more than a month ago, but they are not expected to hit shelves until November. This leaves Nokia little time to convince users of the benefits of the platform over rival operating systems like iOS and Android.
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Nokia really is shooting itself in the foot. It is refusing to discount its outgoing Lumina handsets, and risks being saddled with huge swathes of unsold devices as people wait for the new Lumina 820 and 920.
Please Nokia, discount your outgoing Lumia handsets. It is the only way to tempt people to try the Windows Phone OS.
Even more terrifying for Nokia is that the majority of its phone sales come from its Asha range, running an operating system that the company has now officially ditched.