Nokia sales fell 20% in the second quarter to €7.5 billion and the company’s losses have risen three-fold to €1.41 billion, but shipping of high-end smartphone exceeded analysts’ estimates, reads a company statement. Nokia sales dropped from €9.2 billion in the same period last year, according to the Finnish manufacturer of mobile phones. The company spent in the three months the nearly €700 million from the cash reserves, which fell 14% from first quarter to €4.2 billion, up 8% from June 2011.
Lumia 900, the high-end smartphone from Nokia, has sold 4 million devices in the second quarter. Nokia’s credit rating was downgraded to “junk” – the speculative category for investment – by the three major credit rating agencies. The company notes that losses will continue at the same rate in the third quarter. Chief Executive Officer, Stephen Elop, who is in office since 2010, has announced 20,000 layoffs and closed factories and research and development centers.
Nokia bets on Lumia smartphone with Windows Phone operating system, which competes with Apple iPhone and the multitude of models based on Google Android, led by Galaxy range of South Korean group Samsung Electronics.
Nokia shares rose 8.2% in Helsinki Thursday, according to Bloomberg. Company’s market capitalization has fallen 64% since the beginning of the year and reached yesterday its lowest level since 1994. Company’s market value fell by €95 billion since the first iPhone launch in 2007, and is less than €6 billion. The phone manufacturer had a loss of €1.41 billion in the second quarter compared to a loss of €368 million in the corresponding period last year. Media analysts contacted by Bloomberg estimated a loss of €641.1 million. Sales volume of smartphones decreased by 39% in the period, to 10.2 million units, while shipments of standard mobile phone rose 2.4% to 73.5 million.
After 14 years of domination of the mobile phone market, Nokia has been exceeded this year by Samsung Electronics, which sold in the first quarter 93.5 million phones, according to Strategy Analytics. Another negative sign for the company came last week when the US telecom operator AT & T has halved the price offer of the Lumia 900 smartphone to $50, suggesting that the model is not attractive enough to appeal to customers in competition with the iPhone and Android phones.
However, current Lumia models could become less and less attractive as the launch of Windows 8 is approaching, after Microsoft announced that the smartphones will be upgraded to the new version. Windows 8 will be available starting October 26.
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