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Nokia published its Q1 2012 financial report Thursday, revealing a 1.34 billion euro loss (about $1.7 billion) and a 52 percent decline in smartphone sales compared to last year. Consider this confirmation that Nokia's investment in its Lumia line and the Windows Phone platform hasn't paid off quite yet.
"We have launched four Lumia devices ahead of schedule to encourage awards and popular acclaim," Stephen Elop, Nokia CEO, states in the report. "The actual sales results have been mixed. We exceeded expectations in markets including the United States, but establishing momentum in certain markets including the UK has been more challenging."
While the latest Nokia Lumia 900 was not included in the Q1 financials, Nokia announced last week that the Lumia line is growing. The company sold 2 million Lumia phones in the first quarter. Still, don't expect much improvement in the Q2 financials -- the report states that Q2 devices and services results will remain similar or even dip below Q1 numbers.
Elop attributes the loss to the shift in consumer demand from feature phones to smartphones and to greater-than-expected market competition -- in other words, competition from the iPhone and popular Android devices.
"We're navigating through a significant company transition in an industry environment that continues to evolve and shift quickly. Over the last year we have made progress on our new strategy, but we have faced greater-than-expected competitive challenges," Elop states. "We are confident in our strategy and focused on responding urgently in the short term and creating value for our shareholders in the long term," he concludes.
Nokia's financials show net sales of 7.35 billion euros, around $9.65 billion, down from last year's 10.4 billion euros. The company sold 12 million smartphones, accounting for 1.7 billion euros in sales. Still, these numbers are significantly lower than Q1 2011's results when Nokia sold 24.2 million smartphones at 3.5 billion euros.
In North America, the company sold only 600,000 phones -- both feature and smart devices -- in North America. That's half the number of phones Nokia sold in Q1 2011.
According to the report, the decline in phone sales is largely due to the company's move away from Symbian phones toward Windows Phone-based Lumia devices. Even though Lumia sales are increasing, it hasn't been enough to offset the drop in the company's Symbian line.
"The decline in our Smart Devices volumes in the first quarter 2012 was primarily driven by lower Symbian volumes in all regions, as well as lower seasonal demand for our products, which more than offset the sequential increase in Nokia Lumia device volumes," the report states.
According to the report, the company is "taking action to drive improvements in the trajectory of Lumia sales." It will be interesting to see whether the company's commitment to its Lumia phones and the Windows Phone platform will eventually return a profit for Nokia.
The most recent Lumia 900 has launched to fairly positive reviews. Recent reports that future Windows Phone updates won't be available to current phones, however, might have a negative impact on current Lumia device sales.
