We shouldn't be too surprised by the earnings numbers coming out of Nokia Corp. (NYSE: NOK) today. They've been on a downward trajectory for a while, and reports earlier in the week about steep US price cuts on its new flagship seemed to signal news of a rough spell.
And, that's what the Finnish company delivered: Another losing quarter.
The company's net loss for the three months ended June 30 widened to $1.72 billion (€1.4 billion) from €368 million in the comparable year-ago quarter. Net sales in the second quarter reached €7.5 billion, up from the first quarter's €7.4 billion. But, still, that's a big drop from last year's second quarter sales of almost €9.3 billion.
The company's new Lumia Windows-powered phones won some sales traction, doubling from the previous quarter's small starting base. However, the uptick was not enough to put a dent in the lucrative smartphone market clearly being dominated by Apple, Samsung, and Android-based devices.
Evidence of that started to creep out a few days ago when various news outlets reported that Nokia slashed the price of its Lumia 900 phone by half in the important US market. The price cut comes only a few months after it launched there. The device was originally priced at $99 with a two-year AT&T contract, but the $49.99 pricing was introduced early Sunday, according to the Wall Street Journal report.
Nokia's CEO Stephen Elop acknowledged the bumpy road migrating to Windows and tried to focus on the good things in the pipeline:
Nokia is taking action to manage through this transition period. While Q2 was a difficult quarter, Nokia employees are demonstrating their determination to strengthen our competitiveness, improve our operating model and carefully manage our financial resources.
We shipped four million Lumia Smartphones in Q2, and we plan to provide updates to current Lumia products over time, well beyond the launch of Windows Phone 8. We believe the Windows Phone 8 launch will be an important catalyst for Lumia. During the quarter, we demonstrated stability in our feature phone business, and enhanced our competitiveness with the introduction of our first full touch Asha devices.
We continued to strengthen our patent portfolio and filed more patents in the first half of 2012 than any previous six-month period since 2007. And, we are encouraged that Nokia Siemens Networks returned to underlying operating profitability through strong execution of its focused strategy.
We are executing with urgency on our restructuring program. We are disposing of non-core assets like Vertu. We are taking the necessary steps to restructure the operations of the company, which included the announcement of a new program on June 14. Faster than anticipated, we have already negotiated the closure of the Ulm, Germany R&D site, and the negotiations about the planned closure of our factory in Salo, Finland are proceeding in a collaborative spirit.
Maybe somewhere in all this rah-rah noise there are glimmers of hope that point to Nokia's long-awaited recovery. It certainly sounds promising. The big questions are: How much more survival block-and-tackling will they still have to do, and will they ever really gain a smartphone edge anytime soon?