|Asha's Contribution in Q2 (Tero Kuittinen) ... |
... and Tero has this one correct. The full-fce Touch Ashas should play well in Q3 s they ramp.
>> The Real Reason for Nokia's 18% Bounce in Helsinki - Asha
Soon after posting its 2Q12 report, Nokia shares were up 18% in Helsinki. Much of the rise was attributed to the fact that Nokia managed to sell 4 M Windows phones during the quarter, about a million units above consensus. The Lumia phone sales volume helped the smartphone unit ASP to tick up a surprising 10 euros to 151 euros YoY. This is far, far below Apple‘s iPhone ASP, but at least the scary sales price decline was halted for the time being.
I would argue the biggest relief came from the feature phone segment, where Nokia has rolled out a wide range of new Asha devices over the past year. The Asha phones are feature handsets masquerading as low-end smartphones – they include games like Angry Birds, weather forecast apps, relatively robust email support, etc. They are Nokia’s last line of defense against low-end Android tide that is washing over Asia, Africa and Latin America.
And it looks like the Asha defense might be working. Nokia’s overall phone volume rose an unanticipated 2.7 M units sequentially and 1.7 M units YoY. The good news here is that the seasonal increase is markedly bigger than the annualized increase. Nokia’s feature phone performance was dreadful in 1Q12 in Africa and Asia. African unit sales continued slipping a scary 2 M units sequentially, to 19.5 M units in 2Q11.
But Nokia managed a substantial volume rebound in Asia Pacific and Latin America – unit sales up more than 2 M units sequentially in both key regions. The Asha project found some real traction and stopped Nokia’s feature phone decline during the spring of 2012. This was a crucial defensive win for the company if it wants to avoid massive cash burn next winter.
The Nokia report may well trigger a substantial short squeeze as investors who had been eyeing a possible worst-case scenario – a collapse of feature phone unit volumes – are taken aback.
There was one genuine horror lurking in the 2Q12 numbers despite the better than anticipated smartphone and feature phone numbers. China phone volumes kept slipping -30% YoY and -14% QoQ. Taken together with Qualcomm‘s volume caution and AMD’s China warning, there is now a growing pile of evidence about real consumer electronics softness in China.
China used to be Nokia’s engine of growth, but Chinese volume shipments have now shrunk to less than one third of the Asia Pacific handset shipments – and less than half of Middle East and Africa. Nokia’s chances for a come-back may well hinge on how well it maintains its grip on markets like Nigeria, Malaysia, Indonesia and Philippines even if it gets clobbered in China. ###
- Eric -