Nokia fires rage with 68m euro loss

The once-mighty Finnish phonemaker's woes deepen - but its CEO promises sales will pick up soon.

by Emma Haslett
Last Updated: 06 Nov 2012
In any Nokia reference, it’s hard not to mention CEO Stephen Elop’s ‘burning platform’ speech earlier this year, in which he pointed out that the company is in a make-or-break situation. At the moment, it looks like it’s still breaking: the company posted its second loss in a row in its third quarter, making a group net loss of €68m (£59m). Sales also fell by 13%, to €8.98bn – although its operating losses fell from €403m last quarter to just €71m. So that’s relatively encouraging.

Obviously, Nokia isn’t the only company feeling the squeeze at the moment – if its handset selling price fell to €51 from €65 a year ago and €62 in the previous quarter, you can bet your iPhone 4S that its rivals will be feeling a similar squeeze. But compared with the likes of Apple, that’s still a relatively low selling price – take, for example, the iPhone’s £500-odd price tag – which suggests that its progress into the smartphone market needs to be speeded up significantly if it wants to compete.

But Elop was putting a brave face on things. Shares might be down by 45% since he said in February that Nokia’s planning to scrap its own smartphone operating system, Symbian, in favour of a tie-up with Microsoft on a new range of phones – but he reckons it’s the right strategy. That seems wise enough: in the past, the company has proven that its talents lie with clever phone design (anyone remember the 3310? MT dropped it in its garden and discovered it six months later, in perfect working order), rather than software.

Elop pointed out today that although its sales might have dropped, its sales execution and inventory situation have improved. To be fair to him, turning around a company as enormous and unwieldy as Nokia is going to be a long, slow process. He’s already taken radical steps to rein in the company’s costs, cutting 3,500 jobs at the end of last month. So fingers crossed Elop will be able to pull it off.

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Subscribe

Get your essential reading delivered. Subscribe to Management Today