updated 07:50 am EDT, Thu July 21, 2011
Nokia Q2 2011 clearly disappointing to CEO
Nokia revealed deeper problems than first thought on Thursday after it posted a steep €487 million ($690 million) loss for the spring. The company cellphone shipments fell 20 percent year-to-year, down to 88.5 million total. Its results were compounded by an even quicker drop for smartphones, where its volumes dropped by more than a third to just 16.7 million.
The drop was precipitous enough that Apple has overtaken Nokia in smartphones. A total of 20.34 million iPhones shipped during the same period and possibly making it the second or even first-largest individual smartphone designer. It authoritatively makes iOS the second-largest smartphone platform after Android.
The shift is a changing of the guard and occurred just four years after the iPhone was on the market. Nokia, like Palm, Microsoft, and more lately RIM, has been accused of dismissing the iPhone as a threat early on and refusing to adapt until it was too late to maintain a lead.
Company chief Stephen Elop said the results were "clearly disappointing" and that the hurdles from transitioning over to Windows Phone showed up in a "greater than expected way." Nokia had taken to cutting back on overstock problems, particularly in China and Europe, and was closing many of its online stores.
Elop put most of his faith in the first Windows Phone devices arriving this year. Those who had seen Sea Ray and other prototypes were "very optimistic," he said.
The loss came in spite of getting a settlement from Apple that many believe could be worth $137.6 million per quarter. Elop was quick to say Nokia was "well positioned" to defend its patent rights but didn't say how these would help offset the mounting problems.
Its future plans outside of the new platform focus on cost-cutting beyond the €1 billion ($1.4 billion) it had set out for 2013. Its phone profits will be only at or slightly above the break-even point and are counting more on dual-SIM phones popular in areas like southeast Asia and eastern Europe.