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[4]: Comment by Nelson
by Nelson on Wed 30th Oct 2013 10:23 UTC in reply to "RE[3]: Comment by Nelson"
Nelson
Member since:
2005-11-29

Nokia is losing money, but dramatically less money than say, a year ago. That is gradually improving as its device volumes improve and as its restructuring efforts taper off, as I said they would.

I had the audacity of suggesting that with their cash on hand back in 2011 they could

a) Weather the storm so go speak
b) Improve other divisions to improve the overall company financials
c) Improve D&S volumes to improve the profit margin

I don't reply to a lot of comments like your or the OP because they are a mischaracterization of my positions. I don't care what Nokia had 2 years ago, only what they have and where they're going with it.

But just to entertain that a little bit, the #3 position holder in smartphone volumes is LG with around 5% of the market.

Samsung and Apple control the big numbers and are pretty much the only ones who do. Surprise, surprise. They're the market leaders. Nokia isn't going to get there overnight, if at all.

What is incontrovertible is that Windows Phone is growing in many regions, especially important regions with low penetration. That is the exact same growth traits Android experienced in its early days. You don't simultaneously thrive everywhere, you have offshoots of success from place to place.

If we're going to set the bar every quarter at "They're not Samsung/Apple" then your comments pretty much go without saying and apply to every other OEM on this planet (though presumably you don't refer to their strategy as failures).

LG posted a loss this quarter on flat volume shipments. Nokia posted a profit on 20% growth. But Nokia is failing.

And a word about the sequential and YoY improvements. The argument about "its a small base" are meaningless now that they are in the same range as other OEMs.

Every quarter it becomes harder to post double digit gains, yet they keep doing it. They keep doing it while others do not.

Consider my reply to the OP a reply to your post above as well as pretty much the same things apply.

Reply Parent Score: 3

RE[5]: Comment by Nelson
by crocodile on Thu 31st Oct 2013 13:55 in reply to "RE[4]: Comment by Nelson"
crocodile Member since:
2010-01-18

Nokia is losing money, but dramatically less money than say, a year ago. That is gradually improving as its device volumes improve and as its restructuring efforts taper off, as I said they would.
...


That is the most important point! Nokia is loosing money while selling phones! The goal of a business is to make money! This means that selling phones is not a good bussines for Nokia. It is as simple as that!

Everything else like future income estimates, guesses, and future projections are just that and nothing else!

Reply Parent Score: 1

RE[5]: Comment by Nelson
by crocodile on Thu 31st Oct 2013 14:06 in reply to "RE[4]: Comment by Nelson"
crocodile Member since:
2010-01-18

Nokia is losing money, but dramatically less money than say, a year ago. ... I don't care what Nokia had 2 years ago, only what they have and where they're going with it.


Ok. So you care about Nokia one year ago but not two years ago! That is very convenient for you logic!


But just to entertain that a little bit, the #3 position holder in smartphone volumes is LG with around 5% of the market.


I am not interested in Apple and Samsung and LG.
All I am saying is that Nokia is loosing money by selling phones so this is not a good business for them!
Nokia should and it got out of the bad business of selling phones! Clearly, there is nobody making money by selling Windows phones!


What is incontrovertible is that Windows Phone is growing in many regions, especially important regions with low penetration.

Again growing compare to what?
And how it helps Nokia that it grows in some markets by some strange computations when overall Nokia is loosing money by selling mobile phones????
Really?


That is the exact same growth traits Android experienced in its early days. You don't simultaneously thrive everywhere, you have offshoots of success from place to place.


What is the point of this? Is somehow Windows Phones like Android? I do not think so. By this logic even Jolla phones will succeed because they look like Android in beginning!


If we're going to set the bar every quarter at "They're not Samsung/Apple" then your comments pretty much go without saying and apply to every other OEM on this planet (though presumably you don't refer to their strategy as failures).


I am not interested in others. I am interested in Nokia. Obviously Nokia was number 1 in mobile phones 3 years ago with ~33% and now is barely has 3.3%. This is a complete disaster for Nokia mobile phones! One does not have to be genius to see this!



LG posted a loss this quarter on flat volume shipments. Nokia posted a profit on 20% growth. But Nokia is failing.


Not interested in LG!


And a word about the sequential and YoY improvements. The argument about "its a small base" are meaningless now that they are in the same range as other OEMs.


Yes, YoY and quarter to quarter comptutations are meaningless for any company which has less than 10% of the market!!!


Every quarter it becomes harder to post double digit gains, yet they keep doing it. They keep doing it while others do not.

It is very easy to have growth quarter to quarter when you are below 10% of the market!

Reply Parent Score: 0

RE[6]: Comment by Nelson
by Nelson on Fri 1st Nov 2013 23:07 in reply to "RE[5]: Comment by Nelson"
Nelson Member since:
2005-11-29


Ok. So you care about Nokia one year ago but not two years ago! That is very convenient for you logic!


It makes sense when you are tracking the success or failure of a strategy. Nokia was on a downward trajectory due to collapsing Symbian market share. It finally bottomed out after posting billion dollar losses last year.

This is me June 2012:


So where does Nokia stand? In dire straits financially. Its a time issue, and I don't know if their restructuring will be enough. However, that's not to say that they're going to go into bankruptcy. They're too crucial to Windows Phone for Microsoft to ever let that happen. If the time came, they'd get a cash infusion from Microsoft (or outright be bought out) and they'd be okay until their transition was over.

Nokia is a freaking cheap stock (It's like 2 bucks a share) and the potential upside is amazing if what trends, momentum, and analysts say are true.


Nokia shares are now about to hit $8. Anyone who listened to me and invested is swimming in money right now.

I go on


They need to:
- Restructure, downsize, become a leaner company
- Double down on Windows Phone investments
- Push Windows Phone into the low end Smartphone range (Totally, completely achievable. Its not an IF, its a WHEN proposition).


All of which they have done, especially the last bullet point to great effect.


I am not interested in Apple and Samsung and LG.
All I am saying is that Nokia is loosing money by selling phones so this is not a good business for them!
Nokia should and it got out of the bad business of selling phones! Clearly, there is nobody making money by selling Windows phones!


I think you're wrong for the same reason a lot of people here were wrong last year. You look at figures in isolation instead of identifying a trend. Windows Phone sales trend upwards and as they trend upward (strongly I might add, Sony grew 4%, Lenovo grew 9%, LG grew 0%, and Nokia grew 19%) their financial position will stabilize.

They lost a billion dollars last year. People back then were saying Nokia was going to die imminently. Now they've posted a profit (after I warned it was inevitable due to underlying profitability for five quarters in a row and fading out restructuring charges) and the D&S division is starting to stabilize.


Again growing compare to what?
And how it helps Nokia that it grows in some markets by some strange computations when overall Nokia is loosing money by selling mobile phones????
Really?


Growing compared to Sony, LG, Lenovo, ZTE, Huawei, HTC, and BB.

Nokia is on a region by region basis growing as well in key markets, and this is starting to spread. I warned about it when it was 6% in the UK and now its crossed double digits there.

Things are trending upwards.


I am not interested in others. I am interested in Nokia. Obviously Nokia was number 1 in mobile phones 3 years ago with ~33% and now is barely has 3.3%. This is a complete disaster for Nokia mobile phones! One does not have to be genius to see this!


I understand they were 33% and that they were #1, but they are not anymore and expecting them to be #1 again without first being #9, #8, #7, #6, #5, #4, #3, and #2 is foolish.

They won't go from zero to 60 over night. Things take time, and time has proven me right. I've predicted Windows Phone increases exactly the quarters they've increased, pretty much exactly on target (in fact this quarter I predicted Nokia's volume shipments exactly).

I predicted that the Q3 sales dip was a blip (while others ridiculed me for it) and it turns out, holy fuck, it was a blip.


Not interested in LG!


You should be! Because Nokia was two quarters behind the other market rivals and now they're about one quarter behind. This is what continual double digit growth does. Nokia is catching up faster than its rivals can pull away, and soon Nokia will crack the Top 5 smartphone vendors again. (Its currently ~8)

In fact I expect that to happen next quarter. From there if it continues on its trajectory it can overtake the #3 position before this time next year.


Yes, YoY and quarter to quarter comptutations are meaningless for any company which has less than 10% of the market!!!


So for any company that's not Apple and Samsung sequential and yearly increases are meaningless?

You know Lenovo is #3 with only ~5% market share right? That's such a ridiculous notion that I'm not sure why I even bothered responding.


It is very easy to have growth quarter to quarter when you are below 10% of the market!


Not it is not or other vendors (LG for example) would be doing it consistently.

Reply Parent Score: 2