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Nokia (NOK) Posts Q4 Profit, Yet Suspends Dividend To Boost Cash

 January 24, 2013 08:22 AM

(By Mani) Struggling phone maker Nokia Corp. (NYSE: NOK) swung to a profit in its fourth-quarter on higher sales from Nokia Siemens unit and cost controls. But, it gave a weak outlook for the first quarter and suspended dividend to boost liquidity, sending its shares down 4 percent in the pre-market.

The Finnish company reported net profit attributable to shareholders of 202 million euros, or 5 cents a share, compared to a loss of 1.07 billion euros, or 29 cents a share, last year. On IFRS basis, Nokia earned 6 cents a share for the fourth quarter.

Net sales fell 20 percent to 8.04 billion euros, while it improved sequentially by 11 percent. Devices and Services net sales declined 36 percent, smartphone sales dropped 55 percent, and mobile phone sales declined 19 percent. All these metrics have improved when compared to third quarter of 2012.

Nokia sold 86.3 million mobile devices at an average selling price of 45 euro a unit , down from 113.5 million units sold in the same quarter last year at ASP of 53 euros.

In the fourth quarter 2012, devices & services total smartphone volumes were 15.9 million units, composed of 9.3 million Asha full touch smartphones, 4.4 million Lumia smartphones and 2.2 million Symbian smartphones.

During the fourth quarter 2012, Nokia shipped 6.6 million smartphones, of which 4.4 million were Lumia devices. Symbian devices accounted for 2.2 million units of its smartphone volumes in the fourth quarter 2012. Notably, volumes in North America rose 40 percent to 700,000 units due to higher sales of Lumia smartphones.

Location & Commerce unit sales fell 9 percent to 278 million euros, while sales from Nokia Siemens Network increased 5 percent to about 4 billion euros.

The company ended the fourth quarter 2012 at the higher end of its normal 4 to 6 week channel inventory range. On an absolute unit basis channel inventories increased sequentially.

Nokia expects its Devices& Services non-IFRS operating margin in the first quarter 2013 to be approximately negative 2 percent, plus or minus four percentage point. It continues to target to reduce its Devices & Services non-IFRS operating expenses to an annualized run rate of about 3.0 billion euros by the end of 2013.

Nokia now sees cumulative Devices & Services restructuring charges of about 1.6 billion euros before the end of 2013. This is approximately 200 million euros less than the earlier estimate.

The company expects Location & Commerce non-IFRS operating margin in the first quarter 2013 to be negative due to lower recognized revenue from internal sales, which carry higher gross margin, and to a lesser extent by a negative mix shift within external sales.

Nokia Siemens Networks non-IFRS operating margin in the first quarter 2013 is expected to be approximately positive 3 percent, plus or minus four percentage points. Nokia Siemens Networks now targets to reduce its non-IFRS annualized operating expenses and production overheads by more than 1 billion euros by the end of 2013, compared to the end of 2011.

Year-on-year, net cash and other liquid assets decreased by 1.2 billion euros in the fourth quarter 2012, primarily due to cash outflows related to restructuring charges, the payment of the dividend.

To ensure strategic flexibility, the Nokia Board of Directors will propose that no dividend payment will be made for 2012 . it paid 20 cent dividend in 2011.

At the end of the fourth quarter 2012, Devices & Services and Corporate Common had approximately 33 200 employees, a reduction of approximately 16 500 compared to fourth quarter 2011, and approximately 5 000 compared to third quarter 2012.



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