Nokia expected to announce a huge Q2 eanings loss. Is Windows Phone enough for them?

WP Central

It looks like things are not as good as they should be in the Nokia camp. According to a poll of 38 Reuters analysts the Finnish company are expected to announce next week a second quarter operating loss of 236 million Euros ($289 million USD), almost double its loss in Q1 this year. Shares have fallen to the lowest value since 1996 which is terrible news to hear.

The team here at Windows Phone Central are clearly giving Nokia some love since they adopted Windows Phone as their primary operating system, however it is clear that the public's perception of Nokia may well have fallen by the wayside. We all know that Nokia had the phone market pretty much sown up a few years ago with Symbian and its S series OS outselling all other manufactures. Things have changed greatly since those days; now with iOS and Android dominating the smartphone market. In many countries where Windows Phone is growing it is still heavily out gunned by the opposition. Take here in the UK for example: For the last two years RIM have held the top spot with the BlackBerry being the number one selling smartphone. Nokia now have Windows Phones that are cheaper than a BlackBerry but it seems that getting the youngsters to part with their BlackBerry smartphones is just too much.

I'm not sure what the solution is for Nokia to be honest. I suppose all they can do is keep on bringing us new super hardware combined with the unique applications such as Nokia Music, PureView and Nokia Drive that come standard with the handsets. Maybe time to step up the marketing just a peg or two Nokia?

We should have confirmation of the exact figures next week when the earnings are reported.

[Related: Did Nokia make a mistake by going with Windows Phone?]

Source: CNBC


Reader comments

Nokia expected to announce a huge Q2 eanings loss. Is Windows Phone enough for them?


"I'm not sure what the solution is for Nokia to be honest."
So, Microsoft, are they cheap enough now?  If you were ever going to buy Nokia, now would be a good time.

Yeah, because the MS announcement in Q2 of widows phone 8, and the fact that Lumias are only getting 7.8 version should drive ridiculous sales in Q3, lol!

texantony, haven't you read the comments in which some of the posters rejoiced over the fact that their lumias are not getting WP8? They almost started asking for WM6.5 to replace their WP7.5...

I guess it all depends where you're at because in the us the Lumia 900 was released in April, Easter Sunday, with 99% of the ATT stores closed. That's Q2.

No, I've never heard that before. I have seen lots of people complaining about feeling like they've been left behind by Microsoft though because they weren't getting the full upgrade. As for people wanting to go back to WM 6.5, I've never heard that. Not even once.

I really think getting in the smartphone game is a marathon not a sprint.. It takes time to let your product mature and I'm sure Nokia and Microsoft knows this and planned for it.. Nokia has a bright future.

Nokia trending down before windows phone before Elop.  Going android, not sure if that would of helped too much, it may have decreased the losses, but in a very crowded OEM environment already for android, Nokia would be competing with numerous OEMs with little margin. 
Clearly, NOkia went high risk high reward strategy here going with Windows phone. Market share was already decreasnig anyway, but going android may have just stopped the bleeding for a bit, but they would of continued to bleed. 
Did NOkia make a mistake?  Perhaps, only time will tell, but Nokia would of continuted to struggle whether they kept inhouse OS, gone WP or android. 

Even if it would have to compete with other OEMs, Android still sells better...
Nokia made a huge mistake.
Even though... That mistake is probably going to help Microsoft....

Not necessarily. Samsung is about the only company making significant money off Android. I'm not sure they would be losing any less if they had gone Android.

what the hell are you smoking ? If a company like HTC can earn a profit of 250 million dollars in Q2 . Then, a company like Nokia which has a higher brand value , superior hardware , superior tech like pureview , nokia maps  etc .... can easily make a profit of  0.5 to 1.0 billion dollars

"a company like HTC, arguably one of the top android oem's, had a 57% drop in Q2 TWD from last year's Q2 TWD, and they have been in the android game from day one. There's There's no way Nokia would have had success jumping on that mess.

Nokia was trending down, but the collapse occurred after Elop proclaimed Symbian a burning platform.  No one was going to buy a discontinued OS brand.  Rather like what I suspect has happened to WP 7.5 sales since announcing that phones just recently sold would not upgrade to WP8.
The odds of MS being allowed to buy Nokia are not too good considering that many EU regulators, political leaders and business leaders believe that MS conspired to cause the collapse, probably whiy they have announced they aren't interested anyway. 

Elop should be canned for his flatfooted moves. Even though WP was a good move, it should not have been the only one. Off with his head already. He will never be anything in any corporation ever again.

Funny thing mot reported is if they simply stop the dividend they would stop the bleeding and level off with a slight tick to the black.

What are they doing giving out dividends? Seems like a pretty wrong time tone doing any of that. Apple didn't give out dividends when they sold their first Gen iPhone, then again I'm not sure if they ever have.

What's really going to matter is how much cash they burned Q2. If their cash on hand is being burned at an accelerating rate, they're done for. 

Nokia reported in the first quarter that this upcoming quarterly earnings report will be a loss. They said by the 4th quarter that they should break even or post a profit. They are in a restructuring process. Moving facilities to Vietman. And other restructuring processes. Too bad there will be so much negative pr for a couple of weeks now. The whole world will think that Nokia will be going bankrupt.

They also told investors more recently that things are going to be worse this quarter than their previous guidance. It will be very interesting to see what guidance they give for next quarter when they report next week (my guess is it will be worse than what they were saying at the beginning of the year).

NOK has not had one full quarter of the complete Lumia line being available worldwide. Also the Lumia line is transitional in nature. By my count we are seven months into a gradual build in availability and sales. My expectation is that lumia sales will double (at least) sequentially 1st to 2nd, 2nd to 3rd quarter etc. thru the end of this calendar year. I could be wrong? We'll see.

The losses alone could be recouped by simply removing their dividend... That said, its not a terrible loss.

Even though I'm not an investor in anything mobile, I do think Nokia will be able to turn the corner with their fall line-up of WP8 devices.  Of course there will be pundits/bloggers that will use next week's quarterly repot as a "i told you so" moment...so brace yourself.

Now would be an excellent time to invest in Nokia... with Stock's at their lowest... I think it's going to be crazy exciting for the next few years.  I can see them trading at $12-$15 by 4th quarter of next year.  I'm no mathmetician but a thousand dollar investment could pay for a few vacations for the fam.

Honestly, if they are about to post a huge loss, the best time to buy Nokia would be sometime after that.

Eventually, it will reach to a point, that Microsoft will have to "bail out" Nokia: either more cash investment, or buy it outright. 

It was a big mistake that Nokia took Windows phone as a primary and only smartphone OS. At least they should not have abandon Symbian.
They should have taken Android beside WP.

An argument could be made for Android but nobody was continuing development for Symbian. That was a zombie. Movie around but didn't know it was dead.

THey still make Symbian devices, you seem to forget the new Asha line of phones they released last quarter.  They haven't abandoned it they're phasing it out, that's two different things.
And going Android would be a mess, look at HTC, they've just posted their 3rd straight quarterly loss, where are their doom flags though?  Fact is over in Android land if you're not called Samsung you're fighitng for it's scraps of the market. 

I just have a few things for you sir:
1. Was Nokia failing with symbian prior to adopting WP? YES
2. With everyone besides Apple producing Android phones, would it sold quickly enough to save them in an already saturated android market? NO
3. Are the Nokia WP sales doing well? Yes according to Amazon, ATT, and T-Mobile; It's just going to take some time.
4. Would Google have given Nokia millions to help them recover like Microsoft in doing? No, they have to many other manufacturers producing devices for them to give nokia funds like MS is doing; they would simply tell nokia to take a hike.
5. What planet are you from? Mars?

1. In Q1/2011 Nokia's profit was 704 million euros. They sold over 24 milloin smart devices and those were Symbians. How much do You think they are going to sell Lumias in Q2/2012? 4 - 6 million?
2. I think Nokia would have sell a lot of Androids with Nokia brand and design.
3. 4 - 6 million Lumias in one quarter is not much indeed worldwide. And they are not doing very well in Europe, except in Finland.
4. You are right, MS gives milloins to Nokia but Nokia must pay lisence payment to MS and that is almost equal with MS support. If I do remember right, Google does not take any license payment?
5. I am from planet earth, country called Finland. I am also shareholder and angry about Nokias actions in last one and half year. You can watch share value during last 1,5 years and see how Nokia is managed with WP strategy.

So your blaming MS for all of Nokia's loses when they've only been carrying WP for 8 mos now??? And as for symbian, they're still selling an manufacturing phone with this OS on them. If symbian is selling so well, I would thing it would make of for supposed loses you guy are attributing to WP heh!

Don't you remember that "burning platform" memo and what it caused to Symbian? Why Nokia announced their cooperation with MS even though WP7.5 was not ready. Why did they took another "burning platform" if they knew that WP7.5 is not upgradeable to WP8.0?
Lot of mistakes I think.
I think that MS must support Nokia financially much more than they do now.
MS and Nokia also must bring WP8 devices to customers asap. During this summer, in few weeks. Otherwise result of Q3 is going to be very bad.

The memo was leaked, and should not have been; nonetheless, Symbian users were already migrating to Android and iOS - you know this! 
The memo that was leaked (most likely by a panicking Nokia employee) had an impact, but the trend of consumers dumping Symbian for greener pastures had begun long before that memo.

Symbian did sell very well before that memo. After the memo symbian sales did drop down dramatically. You can't deny that.
Without that memo Nokia would have had much more time to build up a proper Windows Phone strategy. Now they must hurry constantly.
In my opinion the way Nokia changed it's strategy was wrong. And now we shareholders are going to pay those mistakes.

1) By that logic, they should have never moved away from Symbian. WP is a long term move, initial loses for Nokia were bound to happen.
2) You say that now but how can you be so sure? Many companies with many good brands are out there making phones (Sony, Acer, HTC) and none are selling enough to make a good profit. These losses would have happened either way as any new step wouldn't have taken off right away.
3) Considering how new the lineup is, they're selling well. I've only really heard good reports about the Lumias, that's saying something.
4) Wrong. Google charges you nothing but what of the money you pay to other companies that allege Google's OS infringes on their patents? Selling an Android device isn't cheap. You have Microsoft, Apple, Oracle and a few others after you and you do know that almost every major Android manufacturer pays a fees to Microsoft?
5) You should have sold your shares when this WP was announced, if you can't stick through a transitional phase and completely look over the company's core problems, don't bother buying shares cause you'll just be disappointed

Answer to number 5:
I defenitly would have sell my shares if Nokia would have told honestly how bad situation is going to be in next two or tree years. They only tell that MS in going to pay billions and there is going to be "ecosystem" that is competitive to iOs and Android. They did not tell it takes almost two year to have a competive OS (WP8). Nokia has mislead shareholders quite much. They promised that they are going to sell 150 million symbian devices. Now we can notice that they can not do that.

@eeteet - Symbian was on the swift decline, and you know it!  Nokia is still supporting Symbian, but there is no reason and was no reason for them to continue developing for, not that the development was all that great anyway.  And no, Nokia Belle (or FP1) is compelling - perhaps it would have been in 2010, but not today.

"I'm not sure what the solution is for Nokia to be honest."
I tell you, It's all about execution.
To me doesn't seem like Nokia is pushing hard enough and that is the problem. Don't believe, look at this:
You got it.  You can get Android phones for as low as $99. These low end phones are killing Nokia. Why did Nokia not introduce 610 in US? Even in India and other countries it was launched a week back. Are you serious?
Why 800 is not in US? Why is Nokia phone not on Verizon, Sprint, Virgin Mobile etc. Agreed it will come, but if we know it will come later this year, then we don't need this article because we all know. We can not expect Nokia to stop losing blood just be on ATT and not introduce low end phones in all the market. They should learn how to execute from Samsung. Expect more loses on the way. Sad but true.

It takes them to establish a new platform and to work with carriers independantly to push it. It's not that easy. But speaking of 99$ thats the beauty of 7.8 which allows them to sell their old WP7.8 phones at very low cost while selling WP8 at mid-preimum cost. Recovery will take 2 years and remember its only been 8 months with Lumia its going to take atleast 2 revisions overtake the top.

Agreed. My point was to the author's question what Nokia should do/should have done differently to atleast break even.
All I am saying is, if they couldn't work with carriers, why did't Nokia/Microsoft made unlocked phones and cheaper enough off contract ($199 (Lumia 610) - $399 (Lumia 900) ) so people can buy off contract  and try it. Google makes Nexus series available. Why couldn't Microsoft & Nokia.

I agree with you on a few things, such as why Nokia didn't bring the 610 & 800 to the US, but as far as you throwing Android and $99 into your statement, it makes no sense to me, because all I paid for my L900 was $99 + upgraded data package cost so there device are cheap enough to be competitive on contract. So your statement only makes sense if the Android offering is and off contract price. The lumia 900 is currently selling for $49.99 on contract some places, so that's even cheaper for a quality device.
Note: I also agree with you on Verizon, Virgin Mobile

Thanks. I agree with you points.
And yes my point was for off contract pricing. All I am saying is there is not enough choice and price range available for Nokia Lumia prepaid phones. Given me a reason why CLUELSS people would choose $299 Nokia phone ove $219 original Samsung Galaxy S given that even Sales people are biased? Hope you get my point.
I am happy with $49 price & Lumia 900 sales on ATT but unless you see similar things on other carriers it's not gonna help Nokia and it's shareholders. Again I know it will come on other carriers. I am just telling what Nokia should do/should have done, since the author is clueless.

I definitely get your point about biased sale people, but most people, geeks and consumer availble these days want the latest gadgets available to them; that alone will make them chose to pay $80 more for a newer device as opposed to a 2yr old galaxy. Even kids between the ages of 10-12 know about the newest phones and want them, not to mention enterprise (I'm an IT manager and you wouldn't believe how often users are crying for new phones even though  theirs is only 6-8mos old). We are fundamentally on the same page and I feel for Nokia investors, I do think users are begining to get tired of the iphone and static grids of icons and wp will take off. I also think that when you're late to the party...ie MS they should send out sales staff to business with at techie on WP and demo the OS to at least enterprise agreement holding companies like mine. Only companies with large user base can afford EA, so I think it would be wise to work interally (enterprise) and externally (consumers) simultaneously, but that's not the strategy they've been using, they're depending solely on manufacturers and cellular carriers who are already bias. if cell carriers aren't going to put it into customer hands, you do it yourself by sending out sales staff to at least introduce your platform

Android was never an option for Nokia, as they were not in a position to release a dual core based design into the premium segment.  The hardware requirements of WP allowed Nokia to recycle the N9 and launch to market far more quickly.
Neither WP or Android will save Nokia.  Nokia are trying to downscale, but they won't achieve this to the neccesary level before the cash runs out.
Sales of WP8 handsets will not be sufficient to save Nokia.  
It's such a shame.........they were a great company once upon a time

I think that's basically right--they needed an OS that would let them use their two-year old detritus. Unfortunately the OS had absolutely no marketshare or mindshare. 

If I was a non techy investor and you tell me that Nokia will overtop the iPhone and Android I'm going to say your crazy. As a tech fan I know Nokia can top them they are 2nd to Apple when it comes to HW and with Windows SW they can take the lead. Nokia has no problem selling their stock to me but for an investor its a different story. Nokia needs WINDOWS not Windows Phone. They need a wide variety of products to create an awesome unique portfolio. I want to see Nokia Windows RT tablets, Windows 8 ultrabooks, Mini Windows RT media players, Nokia TV's running Windows. I want them to be an all-in-one OEM backed by powerful Nokia services and awesome industrial design. Phones aren't going to cut it they need more than that in the "Post PC" era

Nokia did not make mistake in going with WP, and going with android would be even worse than what is currently happening. People have to stop bitching and realise that its going to take some time ( probably till first quarter 2013) before things start turning around for them. With wp8 they will have by far the best OS on the market coupled with the best hardware ( including pureview cameras) and if that can't save them, nothing can

Going WP, Android or staying with Symbian would ultimately have made no difference.  Nokia are another Kodak.  They were both too big, and failed to recognise the rapidly evolving markets they were in. 
Kodak's blossoming home printing division couldn't come anyhere near to offsetting the losses elsewhere within the company, and unfortunately the same will be true for Nokia with their smartphone division.

HTC is now starting to struggle with android and they're the 2nd OEM so there's no guarantee Nokia would have been better off with android. At least if WP8 takes off they'll be in a good position.

Reposting what i posted earlier
If a company like HTC can earn a profit of 250 million dollars in Q2 . Then, a company like
Nokia which has a higher brand value , superior hardware , superior tech like pureview , nokia
maps  etc .... can easily make a profit of  0.5 to 1.0 billion dollars . So, nokia should have
chosen android instead . I won't be surpised if nokia start to test android devices now and
finally start selling android phones during march of 2013 .

"... finally start selling android phones during march of 2013 "
It's not going to happen. They have a 5 year contract for 1Billion dollars per year with Microsoft. 
Microsoft is in a position to buy them out. They will either wait until the end of contract, or, buy them out while they're down.  Personally, I think they will wait and see what happens with WP8 and then make the decision. It's all a big chess game here, but Microsoft is the winner either way.

Microsoft are far from being a winner in any of this. They are suffering from lacklustre WP7 sales, and a general ambivalance from the general public to both the Microsoft and Windows brands.
Combine this with WP8 which genuinely brings the platform into the 21st century but  to the average joe doesn't "look" any different to WP7, and you hardly have a recipe for guaranteed success.
The prospect of buying a bankrupt Nokia won't raise many smiles in Redmond.

Its specified in the contract that if nokia does not get sufficient sales . Then , it can exit the deal from 2013 . When that happens windows phone will finally be doomed

That "250 million" in Q2 represents a 57% decline from last year. That's a decline for the number 2 oem. HTC is learning that even with their flooding the market, the flood of "bargain" competitor's devices makes for razor thin margins That's not something to shoot for. That would not have helped Nokia.

Old news has we already know. Let's say windows phone kept nokia floating without going bankrupt. If they were using crappy Symbian is than yes they will be Bankrupted already. No one uses symbian

They problem is and continues to be "apps". No one is concerned about a device that has no useful or in-demand apps.

The problem isn't apps.....there are plenty, and it isn't Nokia either.  I think the problem is Microsoft and the opinion consumers have of them.  If Google had launched WP7 and called it Android it would have been a runaway success  

Don't be simplistic, so why didn't Symbian, Palm, WebOS, etc succeeded ? Some internet thinks the world hold a grudge against MS for some esoteric reason, but in the meanwhile the never reported a loss.

Symbian and Palm were at certain points in time a great success.  Sadly, WebOS is a very different story however.  

Are they still around? No. And I'm old enough to know Palms were the cool thing to have, and those Nokias... ooooh girl magnet. Anyway, point being "being internet cool" is not enough, ask Google + or Apple TV.

It doesn't change the fact that Microsoft most definitely have an image problem, and this more than anything is hurting sales of WP

I don't agree, but then again I'm not in school anymore, and not trying to be condescending, it's just in the professional world I don't see any of that. Never heard no one saying "not getting a Nokia, because Steve Ballmer doesn't wear a turtleneck".

Somewhat agree, but I believe the advertising is stupid. Like the ESPN commercial... Sigh. If u are going to waste $ on dumb commercials, just give away the phones to high school kids and watch it take off once they realize how great of a social phone a Lumia can be.

And I'm sorry to say this but Steve Ballmer doesn't help either.  He may be a clever guy, but wheeling him out at product launches is never going to give your company a cool image with the yoof

Yeah, but how many consumer really watch product intros or even know who Steve Ballmer is? Very few; only techs like us and while you may think we're the majority, we're the minority. I guarantee you consumer have never heard of Ballmer and everyone who seen my phone didn't even know MS had a cell phone. I just converted two iPhone users today. I told one lady today to wait until October for wp8 because it would have more features and she said it would probably have more than she needed. Again this came from an iPhone 4s user.

solution for nokia: make the best windows 8 phones that are true high end devices and will put to shame the galaxy SIII. the lumias are nice but fail on specs and features. clearly the CE core wasn't up to the task. the NT core of wp8 is. go nokia

Nokia is comparable to the Dallas cowboys u know they have been on top before and u know it's only time till they win again :P so I'm rootin for both to come out hitting hard with big wins .

Maybe Lumia should've had windows 8 specs, would've been a great selling point: our phone is windows 8 ready, buy w confidence, were prepared for the future. ;)

I'm going to guess there already is a deal for MS to buy Nokia. There's a lot invested in Nokia already and I think there's a line somewhere that says if we aren't at a certain point we will buy you at this price.

My idea for Nokia: Focus on battery live and bring up promotion for this. Cause the biggest down side for all old Nokia users is that the new smartphone generation has such a low batterie live

Guys, I'm really tired of hearing this battery life excuse. Every Android and iPhone user I know has to charge their phone everyday (these are regular people, not heavy app users. Standard calls and texting). Neither of these platforms battery life is greater that the other.

I don't think he's making an excuse. He's saying to make battery life longer so that feature phone users would be enticed to move onto a Nokia smartphone due to it's better than average battery life.

It has nothing to do with market perception on nokia. Its more like releasing a flagship device like the 900 and then in a short while, announces that you cant upgrade that to 8 and you need to buy new phone for that. Doesn't help sales at all.