Embattled Nokia yesterday reported a narrower operating loss, defying the market's expectation that the group would report a larger loss in the third three months of the year.
However, its net sales slowed down and its International Financial Reporting Standards (IFRS) operating loss was EUR576 billion, which narrowed compared to the last quarter. The group yesterday said it saw net sales of EUR7.2 billion, compared with EUR8.98 billion a year ago, and EUR7.5 billion last quarter. Smart device sales fell from EUR2.2 billion a year ago to EUR976 million.
Ahead of the results, analysts expected Nokia to report yet another quarterly loss, citing concerns such as anticipated low Lumia shipments. Nokia's devices and services unit, which incorporates its handsets, turned over EUR3.6 billion, but reported an operating loss of EUR683 billion.
CEO Stephen Elop said the group had expected the third quarter to be difficult for its devices and services business. However, Nokia is pleased that it returned to operating profitability on a non-IFRS basis.
Its non-IFRS operating profit was EUR78 million, a year-on-year decline of 69%, but an improvement on the EUR327 million loss reported last quarter.
Lumia third-quarter volumes decreased quarter-on-quarter to 2.9 million units. "In Q3, we continued to manage through a tough transitional quarter for our smart devices business as we shared the exciting innovation ahead with our new line of Lumia products," said Elop.
Nokia will launch new phones next month and has cut the price of its current inventory, which is weighing on margins.
"While we continue to focus on transitioning Nokia, we are determined to carefully manage our financial resources, improve our competitiveness, return our devices and services business to positive operating cash flow as quickly as possible, and ultimately provide more value to our shareholders," says Elop.
Stock in Nokia lost 4.76% to close at $2.80 during trade in New York yesterday, before rebounding slightly in after-hours trade.
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