In a surprise announcement yesterday, Nokia says on the back of strong sales of its Lumia and lower-end Asha smartphones, the company has "exceeded expectations" and achieved underlying profitability in the fourth quarter of 2012.
According to the preliminary financial results, Nokia's 'smart device' net sales brought in EUR1.2 billion (about R13.8 billion) with a total of 6.6 million units sold. Of those, 4.4 million were Lumia smartphones.
In the third quarter of 2012, Nokia reported it had sold 2.9 million Lumia devices (down from four million in Q2 2012). In terms of smartphones, Nokia says a total of 15.9 million units were sold, 9.3 million of those being Asha smartphones and 2.2 million were Symbian handsets.
Nokia CEO Stephen Elop says: "We are pleased that Q4 2012 was a solid quarter where we exceeded expectations and delivered underlying profitability in devices and services, and recorded underlying profitability in Nokia Siemens Networks.
"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."
Elop adds he was "very pleased" with the response to the Lumia handsets, but acknowledged that sales of the flagship Lumia 920 have been constrained by supply shortages. Nokia did not provide a breakdown of exactly how many units of each Lumia model were sold.
Nokia estimates its fourth quarter operating margin in its mobile phone business will break-even to 2%. It was previously forecast to be around -6%. The official quarterly results are due on 24 January.
Not convinced
On the back of the positive preliminary results, Nokia shares rose by 10.8%, to EUR3.32. Despite the better-than-expected performance, Nokia warned that conditions remain tough and the company forecasts its margin to be about -2% for the first quarter of 2013. Elop said: "We continue to operate in a competitive environment with limited visibility."
Nokia is still struggling to gain significant traction against Android and Apple's dominance of the smartphone market. Global smartphone sales in the fourth quarter are estimated to have been over 200 million. Recent data showed that a record-breaking 17.4 million iOS and Android devices were activated on Christmas Day alone.
According to Reuters, the sentiment among analysts appears to be that it is too early to say if Nokia is making a turnaround.
Redeye analyst Greger Johansson said: "I'm not still convinced that they are going to manage to succeed with those new smartphones. They have to sell a lot more in volumes until you can say that."
Bernstein analyst Pierre Ferragu also remains negative about Nokia shares: "Last year, in order to sustain Lumia volumes, Nokia had to cut prices very rapidly, driving gross margins close to zero. We believe this will repeat this year."
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