Linked by Thom Holwerda on Tue 29th Oct 2013 15:04 UTC
PDAs, Cellphones, Wireless

Nokia has just announced its Q3 2013 financial results, revealing an operating profit of EUR118 million ($162 million) from EUR 5.66 billion ($7.8 billion) revenue. That's up massively year over year, but nonetheless represents another quarter of middling results. The report is the first since Microsoft agreed to purchase Nokia's phone business, and that division - Devices and Services - performed as expected, posting a small loss of EUR 86 million ($118 million).

So, Microsoft is buying the part of Nokia that is losing money, while the parts that make money remain in Finland. Seems like a good deal for Nokia-proper. In the meantime, Microsoft will be saddled with a devices division that is still losing money, and whose increase in sales consists largely of low-end, low-margin devices (like the 520). Interesting - especially since Windows Phone was supposed to prevent Nokia participating in a race to the bottom. I'm sure Microsoft's super-successful Surface division welcomes Nokia's devices division.

The cold truth: even more than 2.5 years after announcing the switch to Windows Phone, Nokia's Lumia range still cannot make up for drop in sales of Symbian devices and feature phones. This is roughly the same timeframe in which Samsung rose to the top. With Android.

Read into that what you will.

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RE[7]: Comment by Nelson
by mbpark on Tue 29th Oct 2013 22:42 UTC in reply to "RE[6]: Comment by Nelson"
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I went through the IFRS financials.

Nokia made out very well. They transfer a lot of employees out to Microsoft in the EU with its comprehensive social welfare systems. They get cold hard cash to pay off the $2.291B in financing they took this year which resulted in their high CFF. They keep the business units that make money.

Microsoft, depending on how they structure the deal with their international subsidiaries, will find a way to make money on a declining asset. Yes, they have high YoY, and you probably did make money. However, I don't see this making money for Microsoft without a few financial wizards figuring out how to bury the losses in the income and cash flow statements.

This much I will say for Nokia: They are moving to a higher-margin business where they provide middleware and mostly getting out of the consumer segment. NSN should provide higher margins.

Microsoft is a nice big company, but they fail to see beyond Windows, Office, Windows Server, Active Directory, Exchange, and Sharepoint. XBox is the exception. They're almost as bad as Dell at integrating their purchases. Microsoft needs someone like Gates to put it together at the top like he did, because Ballmer hasn't.

Speaking of which, Nokia wasted tons of money, and had poor leadership. At least Elop got some money for a division that couldn't put it together. Too bad that several good mobile operating systems were the casualty of their mismanagement.

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