It felt a bit like that when Nokia unveiled second-quarter earningsyesterday.
Furious activity has, indeed, kept tragedy at bay. On the balance sheet
front, Nokia held its net cash buffer at €4.2bn, down from €4.9bn at the end
of March, after paying out €742m in dividends. True, €400m of licence
prepayments helped. But Stephen Elop, the chief executive, insists that
Nokia will scour for similar opportunities in the future.
On the product front, though, the seas in which the Finnish company is
swimming remained brutal. The big plus was a doubling in the volume of new
Windows-based Lumia smartphones shipped, from 2m in the first quarter to
about 4m. That said, there was also a 15 per cent drop in average selling
prices for the devices and, even after stripping out a €220m inventory
writedown on the smartphone side, Mr Elop acknowledges that gross margins
are inadequate. Mobile phones, meanwhile, looked more stable, with volumes
up 4 per cent from first quarter levels at 73.5m units. But here, too,
average selling prices eased 6 per cent, while gross margins dipped to just
over 24 per cent. Overall, the operating loss from devices and services was
€474m, twice the deficit of a year earlier.
So in spite of Nokia’s efforts to push down operating costs, all eyes are on
the lifeboat – namely, Windows Phone 8 devices, which are due to launch late
this year. That, though, could make the third quarter particularly
difficult, given the uncertainty over whether customers will postpone Lumia
purchases ahead of the new-generation devices.
Nokia’s battered shares rebounded 12 per cent – but only the bravest investors
should bet on help arriving at this stage.
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