Nokia has returned to profit, ending an 18-month spell
during which it piled up losses of more than €4bn
(£3.36bn), but scrapped its dividend for the first time in
more than a century in order to conserve cash.
The Finnish mobile phone maker reported an operating
profit of €439m, compared with a loss of nearly €1bn a
year ago, as consumer demand for its smartphones revived
and the decision to slash its workforce by 20,000 helped to
cut costs. The company has returned to growth, with net
sales up 11% on the previous quarter to €8bn.
In a sign that the Windows operating system used in
Nokia's heavily marketed flagship Lumia handsets is
beginning to gain traction, the key devices and services
division also returned to profit.
The number of smartphones sold rose to 6.6m over
Christmas, up from 6.3m the quarter before, with 4.4m of
the total coming from the Lumia range. Although Nokia
sold 20m smartphones a year ago, the average selling
price has rocketed by 33% to €186 as the quality of its
handsets has improved.
Chief executive Stephen Elop abandoned the company's in-
house phone software, Symbian, in favour of Microsoft's
Windows Phone in 2011, in order to produce devices
capable of matching Apple and Samsung's best products.
It was a move many considered risky, given Microsoft's
negligible presence in mobiles and the massive popularity
of Google's Android software, which Nokia could have opted
to use.
"We are very encouraged that our team's execution against
our business strategy has started to translate into
financial results," said Elop. "We remain focused on moving
through our transition, which includes continuing to
improve our product competitiveness, accelerate the way
we operate and manage our costs effectively."
In order to conserve more cash, the 2012 dividend was
cancelled – Nokia paid €0.2 per share for 2011. The
company has paid a dividend since electronic records
began in 1989, although a researcher in Finland claims
shareholders have received a payout every year since
1971, when Nokia was in the paper mill business.
"The fourth quarter 2012 was the bottom line for Nokia,"
said Francisco Jeronimo at market research firm IDC.
"Significant results need to be delivered this year starting
right from the first quarter. From 2013 Nokia has only two
options: either significantly grow sales or change its
strategy, radically."
Nokia's performance was boosted by its network
equipment business, Nokia Siemens Networks, which after
severe cost cutting and a boost in sales achieved its
highest operating margin since its formation in 2007.
The company reported a increase in net cash, which was
up 22% on last quarter to €4.4bn. Nokia had burned
through so much cash to fund its transition over the last
18 months that analysts had predicted it would deplete its
reserves within two years without a return to form and a
drop in headcount.
