Plunging Sales Cause Net Loss in Q3 For Nokia
The handset division of Nokia Corp may have been sold to Microsoft Corp, but that’s not helping it stop the sales plunge. The company was forced to report a loss in the third quarter, but there was a surge in the share price because the company had given a positive outlook regarding the continuing operations, especially the networks unit. Last year, the company had reported a net loss of 969 million euros in the third quarter as compared to 91 million euros that it had to bear this year. The revenue of the company totaled about 5.6 billion euros, which indicated a 20% decline.
However, the struggling company reported that the net profit of its network operations had grown about 33% and it was expecting to have a positive operating margin in the last quarter of about 12%. According to expectations, there will be a solid net sales growth for the company. Instead of causing a decline in the share price, Nokia’s shares actually rose by nearly 7%. In the third quarter, the Finnish company had managed to sell about 8.8 million smartphone and all of them were Lumia products. Moreover, this was an increase in smartphone sales for about 40%.
Last year, the company had managed to sell about 6.3 million smartphones in the third quarter. Nonetheless, Lumia products were less than 3 million back then. The surprising thing was that there was an increase in demand for Lumia products this year, which has always remained one of the toughest markets for the handset maker. But, this rise in sales was not enough for the company to give a positive outlook about the devices and services unit that the company has sold to the software giant Microsoft Corp for about $7.2 billion, which the company will show in the fourth quarter as discontinued operations.
The Finnish firm was more upbeat regarding its existing operations that include Nokia Solution Networks, HERE mapping services and also the Advanced Technologies Unit. It was stated by the CFO of the firm that the company would be in a better position after the devices and service unit would be removed officially because its net sales had fallen by about 19% and had become 2.9 billion euros because the company had only managed to sell about 64.6 million devices in comparison to the 83 million that it had sold a year earlier.
The CFO further added that the company was planning to make further investments in the growth of its mapping and location services. The company managed to retain its number 2 spot in the mobile phone sales having a 15.5% global market share that became possible mainly because of its line of non-smartphones that the company still sells in emerging markets. The company wasn’t able to fare well in emerging markets. The sales of the company lagged well behind that of Apple Inc. and Samsung Electronics as it sold only nine million units as compared to the 33.8 and 88 million that were sold by the smartphone giants.