Nokia suffers transitions blues in Q2 2011 as sales fall 7% to €9.3 billion

Smartphone shipments down 34% year on year

Nokia suffers transitions blues in Q2 2011 as sales fall 7% to €9.3 billion
| Nokia financial news

Nokia (NYSE: NOK) has announced its Q2 2011 financials for the three months ending June 30.

Net sales were €9.3 billion ($13.3 billion), down 7 percent year-on-year.

Of this total, Nokia's Devices & Services division generated €5.5 billion ($7.9 billion), down 20 percent year-on-year.

Nokia also made a group operating loss of €487 million ($695 million), as both the NAVTEQ and Nokia Siemens Networks divisions made losses of €58 million ($83 million) and €111 million ($159 million) respectively.

As a result, the company again published its operating figures in Non-IFRS form (similar to US non-GAAP) to display what it claims was the underlying performance of those groups.

Slipping into second

Following the disappointing results, much attention will be focused on the performance of Nokia's handsets, which the company admits are suffering owing to the OEM's transition away from Symbian long term.

During the quarter, Nokia sold a total of 88.5 million mobile devices, down 20 percent year on year.

Of that, smartphone sales totalled 16.7 million, down 34 percent. Crucially, that means Nokia has slipped behind Apple in the smartphone arena, with its Q2 2011 total coming in below the 20.3 million iPhones Jobs and co. sold during its most recent quarter.

The average price per mobile device was €62 ($89), up from €61 ($86) in Q2 2010. However, the average price per smartphone rose in comparison, from €139 ($199) to €142 ($203).

Nokia generated negative cash flow during the quarter of €176 million ($252 million), compared to a positive cash flow of €944 million ($1.35 billion) last year.

Growing (for the future) pains

"The challenges we are facing during our strategic transformation manifested in a greater than expected way in Q2 2011," commented CEO Stephen Elop.

"However, even within the quarter, I believe our actions to mitigate the impact of these challenges have started to have a positive impact on the underlying health of our business.

"This shift into the execution of our new strategy also has allowed us to identify additional opportunities for operational improvement.

"Thus, while our Q2 results were clearly disappointing, we are executing well on the initiatives that are most important to our longer term competitiveness.

"We firmly believe that our deliberate and unwavering commitment to making the changes necessary at Nokia is the right way to deal with the disruptive forces in our industry and drive value creation for our shareholders."

The company ended the quarter with total cash and other liquid assets of €9.4 billion ($13.4 billion). This is down from €11.1 billion ($15.9 billion) at the end of March.