updated 09:10 am EDT, Thu October 15, 2009
Nokia's summer hurt by poor phone sales
Nokia on Thursday suffered one of its larger blows in recent years with word of especially poor results during its summer quarter. The company posted a net loss equivalent to $1.36 billion between July and September and almost completely reversed a $1.58 billion profit from a year earlier. Much of the blame was placed directly on a deep, 19.6 percent plunge in its revenue from phone sales compared to a year earlier, even though the number was a slight 5 per cent gain versus the spring.
The device losses come from shrinking phone shipments and stalled market share. It shipped 108.5 million phones during the summer, down 7.9 percent compared to the season a year earlier, and claimed the exact same 38 percent market share as it had not only in the spring but also in summer 2008. It claimed higher share in Africa, Europe, Latin America and the Middle East but lost share everywhere else, with especially sharp drops in Asia and North America.
Much of this can be blamed on continued poor economic conditions that led to fewer sales as well as many customers shifting to lower-priced phones, Nokia says.
However, Nokia notes it performance in the smartphone-class market has been disappointing. Although it shipped 16.4 million devices, the amount was a drop from 16.9 million in the spring and only a slight 5.8 percent boost versus last year. Expected better performance by its rivals has led the company to suggest it will only have claimed 35 percent of the smartphone market, flat with what it had last year and a steep drop from 41 percent just a quarter ago.
Its approach is also cautious for the fall and predicts its total phone market share to remain flat.
While Nokia's results are mostly in line with estimates of declining phone sales for all of the industry, its results are indicative of a continued struggle to hold on to relevancy, particularly in smartphones. The Finnish company has stopped reporting specific unit sales of its initially popular 5800 XpressMusic touchscreen phone and has had to contend with negative reviews and sluggish sales of the N97, which only reached the two million unit mark in three months where Apple more than doubled that amount through iPhone sales in the spring, before widespread availability of the iPhone 3GS. It, BlackBerry creator RIM and Android-based devices have all been gaining share in recent quarters, often at the expense of veterans like Nokia as well as a number of Windows Mobile-dependent manufacturers.
Chances for recovery so far are being placed the most heavily on the N900, which has the same hardware features as the N97 but notably drops the aging Symbian S60 platform in favor of Nokia's in-house, Linux-based Maemo operating system.