Nokia Reports Q2 2012 Results: $9.2B In Net Sales, Operating Loss Nearly Doubles To $1.1B

Nokia has just released its fiscal Q2 2012 financials. It’s reported €7.5 billion ($9.2 billion) in net sales, a slight increase from the €7.4 billion last quarter but a 19 percent drop on a year ago. Lumia sales are up to 4 million, and basic devices were also up to 73 million units. But it’s being done at a great cost: net sales are down by five percent, and the operating loss is almost twice the value it was last quarter: €826 million ($1.01 billion) compared to €487 million a year ago. Earnings per share are at -$0.09, failing to meet analyst guidance.

Analysts expected the company to report a loss per share of between $0.10 and $0.11, a drop of nearly 220 percent on the same quarter a year ago. Revenue estimates were $7.3 billion for the quarter, down slightly from the $7.4 billion reported for last quarter.

It’s disappointing, but it shouldn’t come as a surprise. In June, Nokia had issued an update on its guidance for the quarter to revise down expectations. It said it expected higher restructuring charges — €1.9 billion for the next two years — along with unprofitability in the devices unit with operating margins at more than negative three percent (before it had been a straight negative three percent).

Here are some of the numbers in today’s earnings:

Smartphones: Four million Lumia phones sold, in line with estimates. Overall 10.2 million devices sold, meaning that even now Symbian is still outselling the new Lumia range built on Microsoft’s Windows Phone. The total number sold is a decline both on last year (down 39 percent) and the last quarter (down 14 percent). The average selling price on the devices is up by a bit and is now at €151 ($185) but gross margins are getting hit hard: they are now just at 1.7 percent compared to 15.6 percent last quarter and 23 percent a year ago.

Net sales for devices — $5 billion in total — are down by 26 percent on last year, but interestingly the U.S., where it only sold 600,000 devices in the quarter, is the only market where they have increased in the last year:

Feature phones, meanwhile, led by Nokia’s Asha range, the company has managed to hold up numbers much better. Its total sales there, $2.8 billion, is only down one percent on last year, and volumes have grown by two percent to 73.5 billion units.

Operating margins for the devices and services is now at -9.1 percent.

The company’s gross cash position is now at €9.4 billion ($11.5 billion) and net cash is at €4.2 billion (5.1 billion). The company is thought to be sitting on patents worth some 6 billion and may look to sell some of those to shore up its position going ahead through what look to be ongoing tough times.

Looking ahead, in Q3, Nokia says that it expects operating margin to be the same as it is in Q2, “plus or minus four percentage points.” In what Nokia says will be a “challenging quarter” for smartphones “due to product transitions,” it cites ongoing competition in smartphones (namely Android and Apple very much dominating the landscape at the moment); consumer demand for Lumia products not strong enough and the general macroeconomic environment.

For a slightly heartbreaking backstory on a company that might have been looking to innovate too much before its time, and too slow to move with changes in the industry, check out this feature in the WSJ.

We’ll be covering the analyst call at 8am Eastern and will post highlights from that as it happens.