Nokia returns to profit

Nokia has posted its first quarterly profit in 18 months, giving a signal that its long-term strategy to tie its fortunes to the Microsoft Windows Phone operating system could pay off for the once-leading global handset maker.

Nokia Lumia 610

The phone maker reported pre tax profit of €375m (£316m) in the three months to the end of December, compared with a loss of €974m in the same quarter the previous year. Net sales grew 11 per cent quarter on quarter to €8bn, but were down 20 per cent year on year.

Nokia has invested a significant amount of marketing investment in the Lumia range since its launch in 2011, bolstered by Microsoft’s own marketing activity for the flagship Windows Phone handsets.

Both companies had been hoping the partnership would level up the “three horse race” between the Windows Phone ecosystem and Android and Apple.

However, Nokia’s 4.4 million Lumia sales – and 15.9 million total smartphone sales – in the fourth quarter pale in comparison to the 47.8 million iPhones shipped in the same period. Despite the amount of smartphones sold, Apple’s shares fell around 10 per cent as investors feared growth is slowing at the US-based company because analysts had predicted it would sell 50 million iPhones in the period.

Stephen Elop, Nokia CEO, says: “We are very encouraged that our team’s execution against our business strategy has started to translate into financial results…We remain focused on moving through our transition, which includes continuing to improve our product competitiveness, accelerate the way we operate and manage our costs effectively. All of these efforts are aimed at improving our financial performance and delivering more value to our shareholders.”

While Nokia bounced back to profit, the company chose to drop its dividend payment for the first time in more than 140 years as it looked to bolster its cash position due to the competitive environment in the device market, seasonal weakness and the continued fragile macroeconomic climate.

Nokia is expected to reveal at least two handsets at next months Mobile World Congress event in Barcelona, at least one of which is expected to be at a low price point to better compete with the vast array of Android devices.

Last year Nokia’s chief marketing officer Jerri DeVard left the company as part of wide-ranging realignment of the business, which also saw more than 10,000 other job cuts in 2012.

In July Nokia appointed its head of North America markets Chris Weber as executive vice president of sales and marketing and member of the company’s leadership team.

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