Trade Resources Market View Nokia Has Announced an Increase in Sales of Its Lumia Windows Phone

Nokia Has Announced an Increase in Sales of Its Lumia Windows Phone

Nokia has announced an increase in sales of its Lumia Windows Phone devices to 8.8 million units and posted a surprise €118m profit for its third quarter.

However, Nokia's re-acquaintance with profitability was largely due to savage cost cuts as total sales nevertheless fell by 22 per cent compared to the same quarter in 2012.

Overall, sales fell from €7.24bn to €5.66bn as feature phones sales continued to fall - from €6.97bn to €4.48bn, a fall in sales of more than 35 per cent.

However, a reduction in headcount from 105,265 to 87,098 - with 23 per cent of job cuts coming in Europe - helped the company to achieve profitability.

The increase in sales of Lumia smartphones - after sales of Symbian smartphones crashed when the company announced a transition to Windows Phone - represented an increase of just under 40 per cent from the 6.3 million Lumias it sold in the same quarter in 2012.

Lumia sales were also up sequentially on the second quarter, when it sold 7.4 million devices.

The increase in Lumia sales, though, was overwhelmingly driven by cheaper, low-end Lumia devices rather than the premium-priced Lumia 925 and 1020, which compete with the Apple iPhone and Samsung Galaxy S3 and S4.

The surprise profit stands in stark contrast to the net loss of €564m in the same quarter last year, and also represents an improvement on the second quarter of this year, when it posted a loss of €115m.

During the quarter, Nokia agreed to sell its handset business to Microsoft for €5.44bn, which will enable the company to vastly reduce the debts that had threatened its viability, as well as to pay for the buy-out of Siemens from the Nokia Siemens Networks 50-50 partnership, which will form the foundation of the new Nokia.

The company's interim president Timo Ihamuotila said that the company's strengthening sales of smartphones vindicated the decision to shift to Windows Phone.

"The third quarter was among the most transformative in our company's history. We became the full owner of NSN and we agreed on the sale of our handset operations to Microsoft, transactions which we believe will radically reshape the future of Nokia for the better," he said.

"Subject to the completion of the Microsoft transaction, Nokia will have a significantly improved earnings profile, a strong financial position and a solid foundation from which to invest."

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Increase in Lumia Sales Fails to Offset Plunging Feature Phone Sales for Nokia