Nokia continues to bleed money in Q2 2012

Nokia released its interim report for the year's second quarter today, revealing an operating loss of €826 million – or approximately $1.02 billion – despite a slight increase in quarterly net sales. The company also announced it sold four million Lumia devices during the quarter.

The company's Q2 2012 Interim Report reveals it had net sales of €7.5 billion (approximately $9.2 billion), up from €7.4 billion (approximately $9.08 billion) in the previous quarter. Nokia improved its overall smartphone sales both quarter-over-quarter and year-over-year, although only North America had a positive year-over-year change in the company's net sales for devices and services, with increases of 45 percent year-over-year and 38 percent quarter-over-quarter for the continent.

Nokia CEO Stephen Elop's statement on the quarter was blunt: "Nokia is taking action to manage through this transition period. While Q2 was a difficult quarter, Nokia employees are demonstrating their determination to strengthen our competitiveness, improve our operating model and carefully manage our financial resources."

While the company sold four million Lumia phones during the quarter, slightly beating market expectations, it expects Windows Phone 8 to serve as a catalyst for Lumia shipments, Elop said. Despite Nokia's big bet on the Windows Phone platform, Elop cited the company's "stability in [its] feature phone business," perhaps indicating the company's disappointing position in the smartphone industry, which Elop didn't comment on. 

The company continued to burn through its cash reserves, albeit at a rate much lower than analysts had expected. Nokia now holds €4.2 billion in net cash (roughly $5.16 billion), a decrease from last quarter's €4.87 billion (roughly $5.98 billion). According to CNBC, market analysts had expected Nokia's cash reserves to plummet to €3.7 billion. Nokia expects its third quarter to be similar to its second quarter.

Source: Nokia

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despite a slight increase in quarterly net sales; Lumia total sales for the device came in at four million.

The problem is most of those sales are coming from the lower-end models, which really aren't that profitable.

In the US, Nokia has only sold a few hundred thousand Lumia's even after a big advertising blitz. I'm betting the marketing costs and giving free phones to AT&T staff is costing Nokia far more than it's making in NA.

simplezz said,

The problem is most of those sales are coming from the lower-end models, which really aren't that profitable.

In the US, Nokia has only sold a few hundred thousand Lumia's even after a big advertising blitz. I'm betting the marketing costs and giving free phones to AT&T staff is costing Nokia far more than it's making in NA.

Which is no different than Android really ;-) and then lowest end WP is 610 which is not bad to begin with.

simplezz said,

The problem is most of those sales are coming from the lower-end models, which really aren't that profitable.

In the US, Nokia has only sold a few hundred thousand Lumia's even after a big advertising blitz. I'm betting the marketing costs and giving free phones to AT&T staff is costing Nokia far more than it's making in NA.

Day 5 of being deaf because of your silence.

simplezz said,

The problem is most of those sales are coming from the lower-end models, which really aren't that profitable.

In the US, Nokia has only sold a few hundred thousand Lumia's even after a big advertising blitz. I'm betting the marketing costs and giving free phones to AT&T staff is costing Nokia far more than it's making in NA.

And yet the 900 and 710 in the states were both selling briskly and even suffering from supply problems... I've seen comments from people claiming that these were lower end handset sales pumping up Nokia's numbers, but no actual figures have been released, so I seriously question this assumption that people seem to be making.

simrat said,

Lol he wont reply, He knows he cant

I know he won't respond. Just want to put the reminder out there to people (as if they need one) that he will throw out whatever crap he wants without actually back it up, and do exactly what he accuses others of doing. Eventually he will change his name, again, and keep on with his usual unfounded rants.

nohone said,

I know he won't respond. Just want to put the reminder out there to people (as if they need one) that he will throw out whatever crap he wants without actually back it up, and do exactly what he accuses others of doing. Eventually he will change his name, again, and keep on with his usual unfounded rants.

I avoid arguing with him, because he will believe any source which puts MS in bad light, but he will bash any source which says something positive about MS.

Wishful thinking. Did someone really expect the company to be back in the black that soon?

Look also at RIM and HTC, all in troubled waters right now.
Tough times in the mobile market.

TheCyberKnight said,
Wishful thinking. Did someone really expect the company to be back in the black that soon?

Look also at RIM and HTC, all in troubled waters right now.
Tough times in the mobile market.

And the good thing it that unlike RIM, Nokia is actually keeping it's consumer reputation and image quite high, thanks too releasing good quality products whilst they wait for their next big innovation to get them back on track.

TheCyberKnight said,
Wishful thinking. Did someone really expect the company to be back in the black that soon?

Look also at RIM and HTC, all in troubled waters right now.
Tough times in the mobile market.

Exactly. No one with half a brain would have expected them to steer their way back into the black this soon... But the fact that they're depleting cash reserves at a slower pace tells me that they ARE beginning to turn things around. It's a shame that was lost on the writer of the article honestly.

M_Lyons10 said,

Exactly. No one with half a brain would have expected them to steer their way back into the black this soon... But the fact that they're depleting cash reserves at a slower pace tells me that they ARE beginning to turn things around. It's a shame that was lost on the writer of the article honestly.

Are you aware that Nokia keep cutting expenses everywhere? This is why the losses are lower. problem is a limit of how far you can go cutting costs.

Fritzly said,

Are you aware that Nokia keep cutting expenses everywhere? This is why the losses are lower. problem is a limit of how far you can go cutting costs.

They are cutting costs AND increasing revenue. Both are very necessary.

Haha, and now?! Who is laughs at iPhone?

Welcome iOS, you kill Nokia, RIM and Microsoft

...and soon you will kill the only crap TVs
...and next you will kill the web sites, Google and Facebook

I can't wait

mentas said,
Haha, and now?! Who is laughs at iPhone?

Welcome iOS, you kill Nokia, RIM and Microsoft

...and soon you will kill the only crap TVs
...and next you will kill the web sites, Google and Facebook

I can't wait

Android still has higher marketshare... Windows still has higher marketshare... I don't see why is Apple in the lead for now.

mentas said,
Haha, and now?! Who is laughs at iPhone?

Welcome iOS, you kill Nokia, RIM and Microsoft

...and soon you will kill the only crap TVs
...and next you will kill the web sites, Google and Facebook

I can't wait


And people say theres nothing good on the internet... whoever said that hasnt met you.

I salute you, sir. You made my day. Now i see the grass isnt greener on the other side. And for that, cheers!

You people keep us (IT professionals) employed and well fed. And for that, i thank you.

God bless!

Mr.Ed

Way to bury the lede - that 4 million Lumias were sold last quarter, well exceeding analysts expectations. You have an outstanding career ahead of you writing headlines for The Daily Mail.

SiLeNtDeAtH said,
Way to bury the lede - that 4 million Lumias were sold last quarter, well exceeding analysts expectations. You have an outstanding career ahead of you writing headlines for The Daily Mail.

And most of them were lower-end models in Asia and elsewhere, and even that isn't enough to offset the marketshare loss of Symbian, and feature phones. The higher-end, and thus more profitable, models just aren't selling very well, which is a real problem for Nokia as it's bleeding cash fast.

simplezz said,

And most of them were lower-end models in Asia and elsewhere, and even that isn't enough to offset the marketshare loss of Symbian, and feature phones. The higher-end, and thus more profitable, models just aren't selling very well, which is a real problem for Nokia as it's bleeding cash fast.

I think that is supposition. It may be somewhat correct, but without any solid number breakdowns, it's just guessing. 4 million is 4 million. If that turns into 5, then 6, I don't think Nokia's investors and going to care that much where they are selling. Even at a low price point, volume can turn into profits.

SiLeNtDeAtH said,
I think that is supposition. It may be somewhat correct, but without any solid number breakdowns, it's just guessing. 4 million is 4 million. If that turns into 5, then 6, I don't think Nokia's investors and going to care that much where they are selling. Even at a low price point, volume can turn into profits.

Well every site is reporting better than expected low end models, which suggests that's the reason for the inflated sales. I could be wrong, but why would everywhere be reporting the same thing unless it were true?

simplezz said,

Well every site is reporting better than expected low end models, which suggests that's the reason for the inflated sales. I could be wrong, but why would everywhere be reporting the same thing unless it were true?

I see that too, and yet none of them actually cite any source for that as far as I can tell. The media is a funny thing - not everyone does original reporting.

For example, if you take a newservice article from AP, you will see that article presented as original content on any number of media sites. Therefore everyone is "saying the same thing."

If there is a hard-number breakdown from Nokia that shows volume by model, then that's something to pay attention to. If it exists or someone is citing it, I haven't seen that so I could be mistaken.

As for using the word "inflated" to describe the sales numbers, that would seem to imply something false about them. The sales numbers, if accurate, are the sales numbers. They are not "inflated" regardless of where the sales are coming from.

simplezz said,

And most of them were lower-end models in Asia and elsewhere, and even that isn't enough to offset the marketshare loss of Symbian, and feature phones. The higher-end, and thus more profitable, models just aren't selling very well, which is a real problem for Nokia as it's bleeding cash fast.

They're not selling very well? Is that why there was a shortage and many of them were backordered? Further, I've not seen figures that actually support your claim that most of the handsets were lower end. That may be the case, but the fact that sales of the 900 exceeded expectations and the 710 even was seeing very brisk sales that pleased T-Mobile seem to contradict your belief there...

Let's not ignore:
According to CNBC, market analysts had expected Nokia's cash reserves to plummet to €3.7 billion; Nokia expects the third quarter to be similar to its second quarter.
It's looking up for Nokia.

This will change by December after Windows Phone 7.8 & 8 are released along with Windows 8 & over 20 surface tablet's that are going to be released at launch. Besides Nokia is Microsoft's flagship vender for Windows Phone (if Nokia needs cash, Microsoft will invest in them)

winrez said,
This will change by December after Windows Phone 7.8 & 8 are released along with Windows 8 & over 20 surface tablet's that are going to be released at launch. Besides Nokia is Microsoft's flagship vender for Windows Phone (if Nokia needs cash, Microsoft will invest in them)

Everyone says this but why exactly will it change? Its not even a given that Windows 8 will take off, betting everything on that seems like a recipe for disaster. Is there a plan for Nokia if Windows 8 doesnt take off?

efjay said,

Everyone says this but why exactly will it change? Its not even a given that Windows 8 will take off, betting everything on that seems like a recipe for disaster. Is there a plan for Nokia if Windows 8 doesnt take off?

Nokia does have a plan. There was an conference few weeks back stating what they will do in there future (this fall/next spring) wether WP8 works out or not.

winrez said,
This will change by December after Windows Phone 7.8 & 8 are released along with Windows 8 & over 20 surface tablet's

It's the year of Windows Phone!

Sorry couldn't resist after all those "Year of Linux" comments I have seen on Neowin.

LaP said,
Yep next year is the year of WP ...

While I'm hoping that Windows phone sales do pick up, this reminds me so much of the "200x is the year of Linux on the Desktop" .

efjay said,

Everyone says this but why exactly will it change? Its not even a given that Windows 8 will take off, betting everything on that seems like a recipe for disaster. Is there a plan for Nokia if Windows 8 doesnt take off?

It's now going to be one of the screens Microsoft is focusing on. I think you'll see that it will have much more of a push once WP8 comes out.

Majesticmerc said,

While I'm hoping that Windows phone sales do pick up, this reminds me so much of the "200x is the year of Linux on the Desktop" .

Linux never broke 1% on the desktop.

Windows Phone now has 4% sales share in the US, according to NPD.

In terms of adoption, Windows Phone is doing far better than Linux on the desktop. Of course, Nokia profits are a different matter.

TomJones said,

Linux never broke 1% on the desktop.

Windows Phone now has 4% sales share in the US, according to NPD.

In terms of adoption, Windows Phone is doing far better than Linux on the desktop. Of course, Nokia profits are a different matter.

It wasn't an observation of Windows Phone adoption, simply of the turn of phrase used

This is all that matters really:

The company's Q2 2012 Interim Report reveals it had net sales of €7.5 billion (approximately $9.2 billion), up from €7.4 billion (approximately $9.08 billion) in the previous quarter.

You don't turn a company from loss to profit by snapping your fingers, the future looks less grim for Nokia.

funkydude said,
This is all that matters really:

You don't turn a company from loss to profit by snapping your fingers, the future looks less grim for Nokia.


Net sales are most certainly not all that matters. If that was the case, then every company would start wildly spending money, snatching up start-ups and not worrying about operating losses, which would be absurd. Nokia's in a bad position, and even though they're not doing as bad as many expected for the quarter, it's still a pretty grim outlook.

As far as going from loss to profit -- for how long? Nokia's been on the Microsoft gravy train for a while. How many years do we give them before we need to start being concerned? They've been burning through their cash reserves for a long time now, and Lumia hasn't sold as well as many (Nokia included) expected.

I'm not trashing their products, but to say they're not in dire financial straits is just denying reality. It's unfortunate, but it's the truth.

Anthony Tosie said,

Net sales are most certainly not all that matters. If that was the case, then every company would start wildly spending money, snatching up start-ups and not worrying about operating losses, which would be absurd. Nokia's in a bad position, and even though they're not doing as bad as many expected for the quarter, it's still a pretty grim outlook.

As far as going from loss to profit -- for how long? Nokia's been on the Microsoft gravy train for a while. How many years do we give them before we need to start being concerned? They've been burning through their cash reserves for a long time now, and Lumia hasn't sold as well as many (Nokia included) expected.

I'm not trashing their products, but to say they're not in dire financial straits is just denying reality. It's unfortunate, but it's the truth.

I'm sorry, maybe I'm blind and missed this article being labeled as an editorial. It seems odd that the author of a "news" article would start arguing with commenters expressing their "opinions".

SiLeNtDeAtH said,
I'm sorry, maybe I'm blind and missed this article being labeled as an editorial. It seems odd that the author of a "news" article would start arguing with commenters expressing their "opinions".

You seem to be confusing a news article with the comments for the news article. If I had expressed my opinion in the news article perhaps you'd have a point. Me writing news doesn't preclude me from having an opinion and expressing it in the comments.

I have to wonder if these losses are mainly down to their shift to Windows Phone, their luxury division (the sale probably isn't accounted for in Q2) and the mass marketing they did for Windows Phone. Can only hope for them that their shift starts to bear fruits in the future!

Wonder if they'll do a tablet based on Windows RT

Anthony Tosie said,

You seem to be confusing a news article with the comments for the news article. If I had expressed my opinion in the news article perhaps you'd have a point. Me writing news doesn't preclude me from having an opinion and expressing it in the comments.
It doesn't preclude you from having an opinion, but as a "journalist" it does preclude you from expressing it to some degree. If you want to write an editorial, fine. Write one. But you wrote an exceedingly negative headline, you skipped over several of the positive data points in their financials that would contradict the narrative you set out to write with said headline, then you proceeded to argue with the opinion of a commenter, even going to far as to set up a straw man to knock down (i.e. "...but to say they're not in dire financial straits is just denying reality.", when the commenter didn't say that).

I don't know where you went to journalism school, but when I went to college and wrote for the newspaper, we didn't argue our news articles with our readers. It was considered bad form and unprofessional.

Anthony Tosie said,

You seem to be confusing a news article with the comments for the news article. If I had expressed my opinion in the news article perhaps you'd have a point. Me writing news doesn't preclude me from having an opinion and expressing it in the comments.

Did you even read the whole report for this quarter and the one before that?

Neobond said,
I have to wonder if these losses are mainly down to their shift to Windows Phone, their luxury division (the sale probably isn't accounted for in Q2) and the mass marketing they did for Windows Phone. Can only hope for them that their shift starts to bear fruits in the future!

Wonder if they'll do a tablet based on Windows RT

The financials do suggest that the losses are slowing. If that continues for at least the next two quarters, I'd start calling that a positive trend and have a good amount of confidence they were on their way back.

I think a tablet from Nokia would be an outstanding offering. It would present me with a very difficult choice if they produced a Lumia-looking tablet vs. Suface.

Neobond said,
I have to wonder if these losses are mainly down to their shift to Windows Phone, their luxury division (the sale probably isn't accounted for in Q2) and the mass marketing they did for Windows Phone. Can only hope for them that their shift starts to bear fruits in the future!

Wonder if they'll do a tablet based on Windows RT

It clearly states in the report that most of the loss is accounted to the shift from Symbian to WP which sold better that Nokia itself hoped for and the quarterly reports were better than analysts figured. (Somewhat thanks to Nokia-Siemens which one of your authors clearly didn't bother to read) Nokia barely used any of it's net cash this quarter which is good news already considering how much they burned trough in Q1. Also stocks are up +8.8%, according to Google Finance (As of writing)

funkydude said,
This is all that matters really:

You don't turn a company from loss to profit by snapping your fingers, the future looks less grim for Nokia.

Exactly. A more appropriate title for this article would be "Nokia begins to turn things around..." I find it amazing that people think this should turn around in a quarter...

SiLeNtDeAtH said,
It doesn't preclude you from having an opinion, but as a "journalist" it does preclude you from expressing it to some degree. If you want to write an editorial, fine. Write one. But you wrote an exceedingly negative headline, you skipped over several of the positive data points in their financials that would contradict the narrative you set out to write with said headline, then you proceeded to argue with the opinion of a commenter, even going to far as to set up a straw man to knock down (i.e. "...but to say they're not in dire financial straits is just denying reality.", when the commenter didn't say that).

I don't know where you went to journalism school, but when I went to college and wrote for the newspaper, we didn't argue our news articles with our readers. It was considered bad form and unprofessional.


Neowin's not a traditional outlet and hasn't been since as long as I've frequented the site (a few months after it launched). We're not really akin to newspapers or wire services like The New York Times or Reuters. While we don't skew as far in the other direction as sites like those in the Gawker Network, our atmosphere is very different from traditional outlets. This is exemplified in our tagline, "where unprofessional journalism looks better."

We enjoy commenting and interacting with our readers. All our writers are technology enthusiasts. That's just how Neowin's environment is. I write for a newspaper chain professionally, and they're just not comparable situations. As far as my response about Nokia: they are in dire financial straits. Their stock price has been hovering around the lowest levels it's ever been. I hope they pull it out, but the reality is they're not in a good situation.

While I don't want to speak out of place, I doubt our atmosphere will change anytime soon -- Neobond would be a better person to talk to about that. We appreciate our readership and are always listening to comments and concerns.

As far as my educational background goes: it's listed in my bio beneath the article. And Neowin's always looking for more writers from what I understand -- feel free to apply if you'd like to write here.

Anthony Tosie said,

Neowin's not a traditional outlet and hasn't been since as long as I've frequented the site (a few months after it launched). We're not really akin to newspapers or wire services like The New York Times or Reuters. While we don't skew as far in the other direction as sites like those in the Gawker Network, our atmosphere is very different from traditional outlets. This is exemplified in our tagline, "where unprofessional journalism looks better."

We enjoy commenting and interacting with our readers. All our writers are technology enthusiasts. That's just how Neowin's environment is. I write for a newspaper chain professionally, and they're just not comparable situations. As far as my response about Nokia: they are in dire financial straits. Their stock price has been hovering around the lowest levels it's ever been. I hope they pull it out, but the reality is they're not in a good situation.

While I don't want to speak out of place, I doubt our atmosphere will change anytime soon -- Neobond would be a better person to talk to about that. We appreciate our readership and are always listening to comments and concerns.

As far as my educational background goes: it's listed in my bio beneath the article. And Neowin's always looking for more writers from what I understand -- feel free to apply if you'd like to write here.

That's all well and good. But someone with a journalism degree should know better, kitchy tag-line or not.

Like it or not, Neowin is a major source of news for the tech community. Having been a member since 2001, I have seen a very steady and quite deliberate attempt by this site to go from a no-holds-barred free-for-all, to something more respectable.

The tag-line may still be there, but in my opinion, it is very clearly at odds with what Neowin appears to have strived for in the last few years.

still1 said,
Thats a resonable lumia sales...

Until you look at the sales breakdown of the different models. Most of that four million are lower end models with tight margins.

simplezz said,

Until you look at the sales breakdown of the different models. Most of that four million are lower end models with tight margins.


well, that's true.. and US is a huge market and they failed to make any impact here.

simplezz said,

Until you look at the sales breakdown of the different models. Most of that four million are lower end models with tight margins.


Lower end models?

The 710 is pretty much exactly the same as the 800 just with an LCD screen. The 900 is very similar to the 800 just with a larger screen and LTE in the US. The 610 is the only lower end model, and thats pretty much a 710 with 256mb ram.

I find that hard to believe considering Nokia's only sold a few hundred thousand Lumia's at best in NA.

Oh I just noticed that link's from wmpoweruser, that explains it lol.


The 330,000 figure was proved incorrect, even from the people who released that figure.

Guess where the 330,000 figure even came from? Oh that's right WMPoweruser.

-Razorfold said,

The 330,000 figure was proved incorrect, even from the people who released that figure.

Guess where the 330,000 figure even came from? Oh that's right WMPoweruser.


the 330k is not proven incorrect... Nokia Q2 report says it sold 600k Phones in US which included Lumia, other smart phone and feature phone.... and the 330k is Lumia alone sales in US.. So it would be close to 330k

still1 said,

the 330k is not proven incorrect... Nokia Q2 report says it sold 600k Phones in US which included Lumia, other smart phone and feature phone.... and the 330k is Lumia alone sales in US.. So it would be close to 330k

Actually I'd think its mostly Lumias. Nokia has barely BARELY any other devices in the US. And the only ones that are being promoted are the Lumias.

AT&T has the lumia as second best selling device. Amazon has it as one of their best selling devices. T-Mobile says the lumia 710 is doing extremely well.

Nokia's Windows Phone shipments have doubled both in USA and overall, going from 300,000 to 600,000 in USA and 2.2 to 4 million worldwide.

What Nokia should have done is release all their phones on all the carriers in the US. Verizon (the largest US carrier), Sprint and US cellular still don't have any lumia devices.

Then T-Mobile only has the 710. And AT&T only has the the 900. Every carrier should have every device imo since that gives customers the most options.

Edited by -Razorfold, Jul 19 2012, 6:25pm :

still1 said,

those were reported 2 days before Nokia's Q2 statement and are now proven wrong.. Nokia sold just close to 330k give or take 50k Lumia in US and that number is no ways going to give nokia 4% share.

Nokia's Windows Phone shipments have doubled both in USA and overall, going from 300,000 to 600,000 in USA and 2.2 to 4 million worldwide.

-Razorfold said,

Actually I'd think its mostly Lumias. Nokia has barely BARELY any other devices in the US. And the only ones that are being promoted are the Lumias.

You would be surprised. If you look at Q1 nokia report Nokia sold 1.5 million phones including all phones in US when Lumia 900 was not even released at that time... so what are those 1.5 million??? mostly other smart phones and feature phones. like you said if Nokia shipped 300k in Q1 then 1.2 million are other phones in Q1.. so 300k to 600k is unlikely... mostly from 300k to ~400k
what ever the number 300k or 600k its still laughable.

I'm just going to keep copy and pasting this

Nokia's Windows Phone shipments have doubled both in USA and overall, going from 300,000 to 600,000 in USA and 2.2 to 4 million worldwide.

And laughable? Was it laughable when Google only managed to sell like 40k Android devices when it first came out against only 1 competitor? Was it laughable that it took Google 4 years to beat 1 Phone when they had at least 500?