Nokia Records £101m Q3 Profit Thanks To 8.8m Lumia Smartphone Sales

Nokia reported strong smartphone sales during the third quarter of 2013, contributing to a €118 million (£101m) profit ahead of the sale of the Finnish manufacturer’s devices and services unit for £4.6 billion.

This compared favourably to the €115 million (£99m) Nokia lost in the second quarter, and was a drastic improvement from the €564 million loss it sustained during the same period in 2012.

Total sales fell by 22 percent year-on-year to €5.7 billion (£4.9bn), but Nokia remains optimistic that it can thrive once the deal to sell its handset division is completed.

Microsoft boost

Strong consumer demand and a broader range of handsets, particularly those at mid-range price points, resulted in 8.8 million Lumia handset sales, a 19 percent increase from the second quarter and a 28 percent rise from the same quarter last year.

Feature phones have long been a source of strength for Nokia, but despite a four percent quarter-on-quarter increase, sales were down by 37 percent from last year as 55.8 million units in total were shifted.

The figures will nonetheless be a boost to Microsoft, which has seen Windows Phone make significant gains in Europe in recent months, with the platform now claiming a 12 percent market share in the UK.

Nokia unveiled two new six-inch Windows Phone phablets, the Nokia Lumia 1520 and Lumia 1320, earlier this month, alongside its first tablet, the Windows RT-powered Nokia Lumia 2520,

Shareholders are expected to approve Microsoft’s offer at an Extraordinary General Meeting (EGM) later this year, leaving the new streamlined Nokia with its HERE Maps, advanced technology, and network solutions businesses.

Sales at Nokia Solutions and Networks (NSN), formerly Nokia Siemens Networks, fell by seven percent from last quarter and by 26 percent from last year to €2.6 billion (£2.2m). Nokia blamed the decline on lower seasonal sales and a change in the unit’s strategic focus after it bought out Siemens from the joint-venture earlier this year.

New Nokia

HERE Maps reported sales of €200 million, a decrease of nine percent from the previous quarter, but Nokia is convinced of the profitability of its remaining businesses. It points out that even without sales from its handset division, Nokia would still have generated revenues of €2.9 billion (£2.5bn).

“Our strategy work is making good progress and it has already become clear that there are meaningful opportunities for all of our business areas,” said Risto Siilasmaa, Nokia Chairman and interim CEO. “In all of these businesses, we have strong assets that we continue to invest in for the long term benefit of our customers and shareholders.”

“The third quarter was among the most transformative in our company’s history. We became the full owner of NSN and we agreed on the sale of our handset operations to Microsoft, transactions which we believe will radically reshape the future of Nokia for the better,” added Timo Ihamuotila, Nokia CFO and interim President. “Subject to the completion of the Microsoft transaction, Nokia will have significantly improved earnings profile, strong financial position and a solid foundation from which to invest.”

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Steve McCaskill

Steve McCaskill is editor of TechWeekEurope and ChannelBiz. He joined as a reporter in 2011 and covers all areas of IT, with a particular interest in telecommunications, mobile and networking, along with sports technology.

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