Finnish handset-maker Nokia Corp. (NOK) reported a significantly narrower net loss in its first quarter reflecting lower charges. On an adjusted basis, the company reported operating profit on improved margin, even as revenues were severely hurt by lower mobile device volumes and selling prices.
In Helsinki, Nokia shares declined 0.17 euros or 6.30 percent, to trade at 2.47 euros. On the NYSE, shares are down 10.61 percent in pre-market activity.
Nokia CEO Stephen Elop said, "At the highest level, we are pleased that Nokia Group achieved underlying operating profitability for the third quarter in a row. While operating in a highly competitive environment, Nokia is executing our strategy with urgency and managing our costs very well....our Mobile Phones business faces a difficult competitive environment, and we are taking tactical actions and bringing new innovation to market to address our challenges."
In its recently concluded first quarter, Nokia's net loss attributable to equity holders of the parent was 272 million euros or 0.07 euros per share, narrower than a loss of 928 million euros or 0.25 euros per share last year.
The latest-quarter results were hurt by charges of 331 million euros consisting mainly of restructuring charges and amortization. Last year's results had included charges of 1.08 billion euros, mainly related to restructuring charges in Nokia Siemens Networks.
On a non-IFRS basis, which excluded certain items, attributable loss for the quarter totaled 60 million euros or 0.02 euros per share, compared to last year's loss of 281 million euros or 0.08 euros per share.
On an underlying basis, Nokia's operating profit was 181 million euros, compared to a loss last year. Its gross margin improved to 31.4 percent from 27.7 percent a year ago.
Quarterly net sales reached 5.85 billion euros, down 20 percent from prior year's 7.35 billion euros. On a constant currency basis, sales were down 21 percent, and sales declined 27 percent sequentially.
Devices & Services sales plunged 32 percent as volume and average selling prices or ASPs declined in the quarter. All regions recorded sales decline in double-digit rates, except North America, where a sales grew 9 percent despite lower volume.
In the quarter, Smart Devices net sales fell 32 percent due to lower volumes partially offset by 34 percent increase in ASPs. During the quarter, Nokia shipped 6.1 million Smart Devices units, of which majority were Lumia products.
Growth in Lumia volumes were offset by lower Symbian volumes, following its portfolio transition from Symbian products to Lumia products, as well as the strong momentum of competing smartphone platforms.
Mobile Phones net sales fell 31 percent due to lower volumes and lower ASPs amid competitive industry dynamics, including intense smartphone competition at increasingly lower price points.
HERE, the company's recently introduced brand for its location and mapping service, as well as Nokia Siemens Networks were sold less in the quarter.
Looking forward, Nokia expects its Devices & Services non-IFRS operating margin in the second quarter to be about negative 2 percent, plus or minus four percentage points.
Nokia Siemens Networks' second-quarter non-IFRS operating margin is projected to be approximately positive 5 percent, plus or minus four percentage points.
Nokia expects the sequential growth in Lumia unit volumes in the second quarter to be higher than the 27 percent sequential growth in the first quarter 2013.
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