Nokia Reports Profit After Six Straight Losing Quarters
Nokia doomsayers may want to slam the brakes on their pessimism. The company has suffered six consecutive quarters of losses since 2011, but on Thursday it finally reported turning a profit in the fourth quarter of 2012. Boosted by stronger than expected Lumia smartphone sales and a successful Siemens Network infrastructure, Nokia managed to rake in a $585 billion profit off of $10.73 billion in revenue.
The earnings report is a big improvement over previous quarters' losses, but it wasn't all good news. Nokia still reported an overall loss for the year of $3 billion, as the positive final quarter wasn't nearly enough to offset the major losses suffered throughout 2012.
At this point, however, finally achieving underlying profitability is a notable accomplishment for a company that many considered to continue its downward trajectory. Nokia confirmed it sold 4.4 million Lumia smartphones, a big jump from the third quarter's 2.9 million. Its overall revenue fell compared to the previous year, but the decision to market higher-end handsets paid off since a larger profit margin allowed Nokia to offset fewer sales.
Meanwhile, a large bulk of the profit came from its Siemens Network, which made a profit of $334 million. Microsoft also helped infused the company with a $250 million support payment in exchange for Nokia using Windows 8 as the main platform for its smartphones.
"We are very encouraged that our team's execution against our business strategy has started to translate into financial results," said Nokia CEO Stephen Elop. "Most notably we are pleased that Nokia Group reached underlying operating profitability in the fourth quarter and for the full year 2012.
"While the first half of 2012 was difficult for Nokia Group, in Q4 2012 we strengthened our financial position, improved our underlying operating margin in Devices & Services, introduced the HERE brand to expand our mapping and location experiences, and drove record profitability in Nokia Siemens Networks."
Looking forward, Nokia is still expecting to report a loss in the first quarter of 2013 due to issues like seasonally weak demands and "competitive industry dynamics," but there must be a lot more faith in its ability to turn things around after this earnings report.
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