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Nokia Q4 2012 Results: $585 Million Profit

| January 24, 2013 | 246 Replies

Screen Shot 2013-01-24 at 11.09.47Bit of a nice headline at TheVerge. After several quarters of losses, Nokia seems to have recorded a profit of $585 Million ($10.83 Billion Revenue). Good (small) steps in the right direction no? As noted by the Verge, that’s significantly better than the 700M+ loss last quarter or the 1.2B loss last year (as part of the restructuring efforts). Nokia’s net cash rises from $4.7 Billion to 5.8 Billion.

Most of the profit, coming from, oddly enough, NSN.

Here’s the PDF document:

http://www.results.nokia.com/results/Nokia_results2012Q4e.pdf

 

Fourth quarter 2012 highlights:
Nokia Group non-IFRS EPS in Q4 2012 was EUR 0.06; reported EPS was EUR 0.05.

  • - Nokia Group achieves underlying operating profitability, with Q4 non-IFRS operating margin of 7.9%.
  • - Nokia Group strengthened its net cash position by approximately EUR 800 million sequentially, of which
  • approximately EUR 650 million was generated by Nokia Siemens Networks.
  • - Devices & Services Q4 non-IFRS operating margin improved quarter-on-quarter to 1.3%, due to an increase in
  • gross margin as well as a decrease in operating expenses.
  • - Nokia Siemens Networks non-IFRS operating margin improved quarter-on-quarter and year-on-year to a
  • 14.4% in Q4, the highest level of underlying operating profitability since its formation in April 2007, primarily
  • due to an increase in gross margin.

Full year 2012 highlights:
Nokia Group full year 2012 non-IFRS EPS was EUR -0.17; reported EPS was EUR -0.84.

  • - Nokia Group achieves underlying operating profitability, with full year 2012 non-IFRS operating margin of
  • 0.4%.
  • - Nokia Group ends 2012 with a strong balance sheet and solid cash position. Gross cash was EUR 9.9 billion and
  • net cash was EUR 4.4 billion, after incurring cash outflows related to restructuring of approximately EUR 1.5
  • billion and dividend payment of approximately EUR 750 million.
  • - To ensure strategic flexibility, the Nokia Board of Directors will propose that no dividend payment will be made
  • for 2012 (EUR 0.20 per share for 2011). Nokia’s Q4 financial performance combined with this dividend proposal
  • further solidifies the company’s strong liquidity position.

79.6 Million mobile phones

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6.6 Million Smart devices.

There’s an odd split here though…(total 86.3M devices this quarter)

9.3 Million Asha Smartphones

4.4 Million Lumia Smartphones

2.2 Million Symbian Smartphones.

 

Screen Shot 2013-01-24 at 11.27.32

The Nokia Outlook:

 

  • - Nokia expects its Devices & Services non-IFRS operating margin in the first quarter 2013 to be approximately negative 2 percent, plus or minus four percentage points. This outlook is based on Nokia’s expectations regarding  a number of factors, including:
      • - competitive industry dynamics continuing to negatively affect the Mobile Phones and Smart
      • Devices business units;
      • - the first quarter being a seasonally weak quarter;
      • - consumer demand, particularly for our Lumia and Asha smartphones;
      • - continued ramp up for our new Lumia smartphones;
      • - expected cost reductions under Devices & Services’ restructuring program; and
      • - the macroeconomic environment

Nokia continues to target to reduce its Devices & Services non-IFRS operating expenses to an annualized run rate
of approximately EUR 3.0 billion by the end of 2013.
– Nokia expects Location & Commerce non-IFRS operating margin in the first quarter 2013 to be negative due to
lower recognized revenue from internal sales, which carry higher gross margin, and to a lesser extent by a
negative mix shift within external sales.
– Nokia and Nokia Siemens Networks expect Nokia Siemens Networks non-IFRS operating margin in the first
quarter 2013 to be approximately positive 3 percent, plus or minus four percentage points. This outlook is based
on Nokia Siemens Networks’ expectations regarding a number of factors, including:

      • - competitive industry dynamics;
      • - the first quarter being a seasonally weak quarter;
      • - product and regional mix;
      • - expected continued improvement under Nokia Siemens Networks’ restructuring program; and
      • - the macroeconomic environment.

Nokia Siemens Networks now targets to reduce its non-IFRS annualized operating expenses and production overheads by more than EUR 1 billion by the end of 2013, compared to the end of 2011. Nokia Siemens Networks previous target was to reduce its non-IFRS annualized operating expenses and production overheads by EUR 1 billion by the end of 2013, compared to the end of 2011.

Cheers Alvester for the heads up.

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Category: Nokia

About the Author ()

Hey, thanks for reading my post. My name is Jay and I'm a medical student at the University of Manchester. When I can, I blog here at mynokiablog.com and tweet now and again @jaymontano. We also have a twitter and facebook accounts @mynokiablog and  Facebook.com/mynokiablog. Check out the tips, guides and rules for commenting >>click<< Contact us at tips(@)mynokiablog.com or email me directly on jay[at]mynokiablog.com
  • incognito

    Last quarter was saved by Asha, this quarter saved by NSN, they’re running out of things to sacrifice on the altar of the failed WP strategy. I pity those who think these are good results.

    Asha has an expiration date, nowdays low-cost Androids are not the likes from 2010 – they are actually quite capable for the price and the latest batches can easily overtake the Asha’s upper hand in that segment. Not to mention other side-players beside Android. I do hope Nokia has some really, really good innovations planned for the Asha line to be able to keep its pace in 2013, beyond that – it’s pretty obvious that featurephones and ‘smart’ featurephones are a dying breed and only a fool could count on Asha sustaining the company the size of Nokia.

    As for NSN, I’m perplexed by their sudden strong success considering the history of that branch and the fact that of all the restructuring and downsizing the NSN was the least affected. How long will this last, I have no idea, but for Nokia’s sake let’s hope NSN will not drop back to the loss-making department. The recipe is simple (worked so far) – keep Elop away from NSN, the fool doesn’t even understand mobile devices let alone mobile networks.

    All in all, not much to write home about. I never thought I’d say that, but I think it’s time for Nokia to sell its smartphone department completely, if they can find somebody crazy enough to buy it, and focus on some other things – if they continue wasting money from healthy departments on trying to resuscitate the department which performed a ceremonious suicide under the wise leadership of that incompetent buffoon, they’ll go under as a whole. Sadly, I don’t think that even strong strategy shift at this point can save that department. It’s dead, Jim.

    • Noki

      As usual great review. +++++

    • dss

      ya.. they are done. They either need to downsize drastically, or they just sell the thing and get it over with.

      This is agony..

      • Noki

        The interesting bit really is NSN. I’m very surprised about that, specially taking into account that not much changed in that area and competition is fierce, and turning a loss profit tank into a revenue making one is something that as been puzzling me. Will it be able to keep it up???? that is the 1 billion dollar question…

        • Marc Aurel

          4G networks (LTE etc.). The Chinese do not yet have those working very well, and apparently NSN has at least as good tech as Ericsson (some say better). How long that will last depends largely on how quickly the Chinese will catch up.

      • incognito

        Frankly, I don’t see how can they downsize any further or more rapidly than they are doing now – they’ve already started cutting into the meat. They’ve practically removed all of R&D, ffs, how do they plan to have any future without that is beyond me. It’s time to cut-off some limbs, the body/core is already as slim as possible.

        • dss

          Who needs R&D when you have Windows Phone… ?

          • Noki

            hehhheheheeh :D

            • tomwhat

              i think i will make a diploma in tiles soon ;-)
              The most “genious” UI in a restricted pimped dumb phone OS…

    • Pasanen oli hieno mies

      Asha does have an expiration date but what was the alternative?

      Starting to ship Meltemi phones in Q4 2012 or perhaps only in late 2013. No real application support for Meltemi and making it Android compatible would render it effectively into a low end Android phone competing with other Android phones. Without access to Google Play that is.

      A path to destruction.

      • Noki

        so according to your “logic” (logic is a nice word to use wen ever you spew out anything) having Nothing is better than having something??????

        PLus most of with you say above is your standard thread of LIES “No real application support” and made up pseudo facts ” perhaps only in late 2013″…

        yes?

        P.S. please do not bother to answer its really annoying to read BS lies, and I say LIES because you are a LIAR as you have fluently proved.

        • Pasanen oli hieno mies

          I guess you were supposed to be the one not to reply to me. At least you said that you are not going to reply to me. So, this is your idea of honesty and keeping promises?

          You are really acting like an adult!

          Asha is not nothing. Nokia is selling lots of Asha phones. Selling Meltemi instead of Ashe would have forced Nokia to sell no Asha phones while Meltemi was still developed.

          Unfortunately Android is already hitting the price point Meltemi was targeting. Meltemi was just too little too late.

          Yes?

          • Noki

            Yeah but I figured some one had to expose you for what you are. Or else some one might think you are something else than a Dishonest Liar. People might think you actually are not making stuff as you go and spreading FUD based NOTHING.

            You know like the one you just spread up there.

            • Pasanen oli hieno mies

              I see.

              So you were not able to keep your promise because you have to praise the Truth for people?

            • Jiipee

              You keep on falling into that trap innovated by Spede ;)

              Yes?

              • Pasanen oli hieno mies

                For him, there is an easy way out of that trap.

                Steve Jobs used to change his mind and that’s great. It’s stupid to hold on with the same opinion if the world changes.

                Yes?

          • Marc Aurel

            Asha Touch and Meltemi were not intended at the same market. Meltemi would have started where Asha Touch ended (around the Asha 311 price point) and extended up to Lumia 610 ($200] price point. But I agree that Meltemi was severely compromised by the strategy change in 2011, which stripped a large part of its potential app support by effectively deprecating Qt.

            • Pasanen oli hieno mies

              That is extremely strange.

              How was Meltemi supposed to compete with low end Android phones? Android is starting to compete with mid range Asha phones and Meltemi was supposed to cost much more?

              Let’s suppose meltemi shipped in Q4 2012 and they started to ship several models in volumes by Q2 2013.

              Why would anyone buy anyone buy a Meltemi phone in Q2 2013 when you could pick up some really nice Android phone for less than the price of an Asha 311?

              Meltemi was just too late.

    • Mike

      Great summary. I agree with you, best thing right now is to sell the smartphone department and focus elsewhere. That way they can still save the Nokia brand.

      • dss

        Microsoft should make a move.. just shift some cash to the Chinese, they buy it instead of them (too obvious, EU not happy), and they gradually sell it back to MS, and concentrate on making Windows Phones exclusively in the meantime.

        Done deal hah

        • Mike

          Well, only for the smartphone division! Nokia should keep everything else.

          • Noki

            Yeap apart from the Elop driven lumia/simbian fiasco the rests doing ok and we know he only focused on “making plan A work” soooo…the rest was out of his radar..

            • incognito

              The scary thing is – with these results, those healthier departments might get within his viewing scope and he might decide to implement some of his brilliant strategies to make them better :(

              • Noki

                God, (coff.coff.Microsoft) forbid that ;)

            • Mike

              Yeah! “Plan A” has failed miserably. Nokia should sell the smartphone division without the Nokia name. Keep all the rest under the Nokia brand. Of course, let Elop and his gang move with the smartphone division to the new owner.

              Then Nokia can slowly start over. Networks are profitable again. Focus on R&D and the next big thing.

    • nn

      They say they want to cut at least about 1 billion euro in NSN expenses at the end of 2013, relative to the end of 2011. So I guess not the same plunge like with smartphones, but still not insignificant number.

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  • ms.nokia

    :)
    good results so far,
    especially considering the lack of lumia supply and worldwide market availability.

    nokia is re-growing and can only get stronger each quarter as more new devices are released.

  • stylinred

    NON-IFRS who cares about Non-IFRS… that explains why the stock took a dive today

    • ms.nokia

      i believe the stock drop value will be equal to the anticipated dividend payment that was canceled.
      the stock is not worth the same value once its dividend was stopped.

      • Jiipee

        The main reasons for the drop what on the financial press have been given:
        – Channel stuffing ie 3-4 weeks stocks in sales channel
        – suprise in the timing of minimum royalty payments
        – bad sales results in China and US in comparison to the investment
        – component shortage continues

        I dont think that major investors were expecting dividends. Nokia just raised expensive loans and it would have been foolish to pay the loans out as dividend.

    • Janne

      stylinred:

      Wrong. The headline is IFRS profit.

      Nokia’s IFRS profit for Q4/2012 was 439 million euros = $585 million.

      Nokia’s non-IFRS profit was much higher than that: 635 million = $810 million.

      (Besides, non-IFRS profit is actually very telling of actual business success. IFRS includes so many accounting valuations that it rarely tells of real monetary losses or gains.)

      • nn

        Pardon me, but this is ridiculous. In fact IFRS results are the real monetary loses or gains, which is why Nokia is required to compute them. Sure, they are not perfect, mainly because single number in one point of time can’t capture the complexity of big company.

        But things like marking big write-off in one quarter while the loss happened gradually over many previous quarters are still real values and money lost. If you think Nokia can incur IFRS loses indefinitely and be happy with the “underlining profitability”, you are very mistaken.

        • Janne

          I am not mistaken. There is a real reason why in Finland non-IFRS numbers are preferred.

          • nn

            OK, so the view that they can permanently run IFRS loses is not mistaken. Good.

            At least that explains why you think they are secured and can happily continue on the WP path into foreseeable future.

            • correct

              Listen moron, do you not get that they posted an IFRS profit for Q4 AS WELL AS non-IFRS? Who cares about your troll argument? They posted a nice profit for Q4 and cash on hand went up by a nice amount. Period.

  • correct

    Screw you haters, scrrewwww yoouuu!

    Nokia made a REAL profit for Q4. Net cash is UP, and most importantly, ASP for smartphones is HIGHER than it has been for yours! Smartphones ASP is close to 200, that is incredible!

    Keep making all the excuses you want haters, while and millions of others real Nokia fans will keep enjoying the best phones in the business.

    • correct

      *years

    • stylinred

      non-ifrs doesn’t mean anything

      • Janne

        Except Nokia made IFRS profit also. The Verge number is IFRS. Non-IFRS is much higher.

        And ASP is up a lot, when everyone (including many vocal critics here) thought it would be down.

        • Jiipee

          Lumia asp was a positive surprise, I have to admit. Would be interesting to see the mix. Also Symbian was high. Some sources claim that margins were down. Need to confirm that. Nokia may have lost a lot of bargaining power, which can also be seen in supply shortages.

          • correct

            Are you for real? MARGINS were down? For what, Asha and feature phones? Absolutely NO WAY margins were down for smartphones, not with an ASP of close to 200.

          • Noki

            how can it be surprise, last quarter it only had the old noncompetitive wp7 Lumia range that was only selling on discount, this quarter they have the new competitive hardware (l920 is a solid piece of hardware) with wp8 and fresh price tag… the ASP could only go up.
            problem is that it did not sold much only pathetic 4.4 and Q1 will not be much better I suppose

            • Janne

              Everyone and their Elop-hating mother knew ASP was going down here because of the WP7 Lumia firesales. The usual posters here said so. It was possible too, of course, it’s just that when people make certainties out of these things prematurely to support their point of view those predictions become problematic.

              • Marc Aurel

                The WP7 firesales started already in Q3, so their effect was divided between Q3 and Q4. Lumia 510 sales also did not really start until well into December, which also helped the ASP. Low end Symbian devices such as the C5-00 and C5-05/06 were also finally gone and a significant part of Symbian sales were probably 808s, further boosting ASP.

                Still, I have to say that I was somewhat surprised to see smartphone ASP improve so much. I expected the WP7 firesale and WP8 sales to about cancel each other out.

        • correct

          Exactly. Eat it haters. All the Symbian and Meego trolls who were so proud of Nokia ASP being in the 160-170 range during Symbian peak days, eat it. The ASP for Lumias is WAY higher than Symbian ever had, haters here have been silenced.

          • akse

            Back then Nokia had like 5-15 Symbian models ranging from 100e-600e. They also sold over 25M in each Quater where most of the phones were the cheap 100e-250e models.. so yeah of course it brings down the ASP.

            • correct

              And now Nokia also has Asha full touch models being counted as smartphones too, which brings ASP down.

              • jiipee

                Nohoo, they are counted as mobile phones according to the report. They even mention Swipe UI under mobile phones unit.

                • ULTIMATEANTITROLL

                  Then Nokia went back against their word, and reclassified them. Nokia specifically mentioned recently that Asha full touch models were considered to be “smartphones”.

                  This is strange to me that Nokia didn’t classify them smartphones in Q4 results. As Ashas continue to get more capable, at what point then will Ashas be considered smartphones and not simply mobile phones?

                  Ashas are a lot more capable than low end Blackberries for example, yet they are classed as mobile phones by Nokia, yet Blackberry classes their low end models as smartphones.

                  • ULTIMATEANTITROLL

                    *RIM classes their Blackberries

        • Marc Aurel

          The ASP picture is not that simple. Smart devices ASP QoQ is indeed up remarkably, but all devices ASP YoY is still down. That is because the Lumia unit sales are so low — they can’t even make up for the midrange and low end Symbian sales in Q4 2011 when it comes to all devices ASP.

      • correct

        You’re an idiot. Nokia made PURE Profit, IFRS, non-IFRS it doesn’t matter. It’s REAL profit after ALL expenses are accounted for.

        • Janne

          Nokia made *both* IFRS and non-IFRS profit.

          $585 million IFRS, $810 million non-IFRS.

          Nokia’s cash increased by a cool one billion dollars in Q4.

          • nn

            And YoY cash is down by more than one and half billion.

            • correct

              Quarter-to-quarter cash flow is up by a lot troll.

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  • Jorge Arturo

    I don’t know, it seems fake, somehow, I know the numbers are real, but how much of that money actually came from selling phones, after all they recieve MS money, they sold their HQ, close offices and fire people, theyare selling more S40 and S30 phones than smartphones (by much more than before) so it is hard to see it as a good news.

    • akse

      roughly $300M smartphones and other phones and $300M from NSN (Networks)

      • Luisito

        MMM… The only division making money apart from NSN is Mobile Aka Asha Phones, S40 and low end phones, Smartphone division is making loss yet… So yes, these incomes cames from others thing more than selling phones

    • correct

      Another troll. Devices and Services operating margin was over 7%.

  • James

    sub.

  • Berto

    But still, Nokia is going down, its inevitable

    • Sammy

      Pointless (not to mention rude) necro is… pointless.

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