|The Nokia Quarter and Nokia Year That Was ... |
"Nokia is in the middle of a major transition period and bearing that in mind, it’s fourth-quarter results were respectable. It’s a really tough market when you have vendors like Apple and Samsung almost running away with it. Nokia has got tough quarters ahead of it but it is moving in the right direction." - Pete Cunningham, Canalys -
"Although many of the indicators were downward or negative, the impression is that Nokia is weathering the storm relatively well in the light of the massive changes - including its partnership with Microsoft and the phasing out of the aging Symbian platform - that it embarked upon in 2011." - Helsingen Sanomat -
Those quotes sum up today's results rather well I feel.
I have only scanned the earnings statements and have yet to comb them for detail. As an investor who holds the company's stock long after an August reentry it's more enjoyable to do so when there has been an upside surprise. Today, however, the quarter's and year's final results came in pretty much as anticipated but slightly better than consensus, and as a consequence NOK1V shares closed today on the Helsinki exchange slightly up (+€0.11, +2.7%) at €4.16 on volume of close to 100 million shares and comfortably off its 52 week and 13 year low of €3.33. As today's numbers are more fully digested it will be interesting to see the days close on NYSE and the week's closes tomorrow afternoon in both Helsinki and New York.
From my perspective the good news is that very large write downs have been made, restructuring is preceding, and the deck has been cleared of debris, setting the stage for a gradual recovery over the course of this year, and ideally at this time next year we will see Nokia well positioned headed into 2013 in both feature phones and smartphones, and very possibly as a new entrant in the Tablet MID game.
In CY/FY 2011:
• Nokia Net Sales were €38.659 Billion ($51.555 Billion USD)
• Nokia generated €1.137 Billion ($1.516 Billion USD) net cash from operating activities.
• Net Sales of Nokia Devices and Services were €23 943 ($31.930 Billion USD).
• Mobile mobile device volume was an industry leading 417.1 million units.
At year end Nokia held net cash and other liquid assets of €5.581 ($7.443 Billion USD).
Nokia's reported Q4 2011 figures displayed a whopping headline operating loss of €954 million against profit of €884 million in 2010 but this loss included a substantial €1,090 write-down on impairment of goodwill in the Location & Commerce unit (NAVTEQ and Nokia's social location services operations) which was moved out of Nokia's Devices & Services.
Non-IFRS operating profit was €478 million ($637 million USD) down 56% YoY but up 90% QoQ, with Devices and Services non-IFRS profit at €292 million ($389 million USD) and margins at 4.9%. In Q4 2011 the non-IFRS results exclude a total of €1.432 billion of charges including the €1.090 billion charges related to the partial impairment of goodwill in Location & Commerce but also include a number of restructuring charges (€100 million in Devices & Services, €25 million in Location and Commerce) and a variety of charges related to acquisitions and similar (e.g. €24 million because of Accenture deal).
In his opening remarks today Stephen Elop pointed out that:
"In October, just six months after signing an agreement with Microsoft, we introduced our first two devices based on the Windows Phones platform – the Nokia Lumia 800 and the Nokia Lumia 710. We brought the new devices to market ahead of schedule, demonstrating that we are changing the clock speed of Nokia. To date, we have introduced Lumia to consumers in Europe, Hong Kong, India, Russia, Singapore, South Korea and Taiwan. We have also started our important re-entry into the North American market. Earlier this month, T-Mobile started selling the Nokia Lumia 710 as a lead device. We also announced the new Nokia Lumia 900 with AT&T, and immediately received a number of industry awards. The Nokia Lumia 900 is our third Lumia device, our first LTE device designed specifically for the North American market, and AT&T is positioning the Lumia 900 as a lead LTE device. In the war of ecosystems, clearly there are some strong contenders already on the field. And with Lumia, we have demonstrated that we belong on the field. Our specific intent has been to establish a beachhead in this war of ecosystems, and country by country that is what we are now accomplishing. To date we have sold well over 1 million Lumia devices. From this beachhead of more than 1 million Lumia devices, you will see us push forward with the sales, marketing and successive product introductions necessary to be successful. We also plan to bring the Lumia series to additional markets including China and Latin America in the first half of 2012."
Looking forward, Nokia expects its non-IFRS Devices and Services operating margin in Q1 2012 to be around break even ±2%, indicating that Nokia is facing another tough quarter even as it continues the roll out of new products which will be offset by the impact of lower than expected short and long term Symbian sales.
As anticipated Nokia's board proposed 45-year young Finnish entrepreneur and founder of software security company F-Secure Risto Siilasmaa who has been a Nokia board member since 2008 as its new chairman to replace long-time leader Jorma Ollila, who is due to step down in May.
In much deserved fashion Marko Ahtisaari has been promoted from SVP to EVP, Design, and appointed to the Nokia Leadership Team reporting directly to President and CEO Stephen Elop, effective February 1, 2012.
Nokia also announced that its Board of Directors will convene the Annual General Meeting on May 3, 2012 and that they will submit a proposals to to pay shareholders an annual dividend of €0.20 per share for the fiscal year 2011. The ex-dividend date would be May 4, 2012, the record date May 8, 2012 and the payment date on or about May 23, 2012.
Stephen Elop continues to impress me. He and Timo Ihamuotila do a fine job of handlig the earnings CC's. There were some very good questions posed to them today and I felt they both did a very good job of responding. The transcript is now available:
>> Nokia Corporation CEO Discusses Q4 2011 Results - Earnings Call Transcript
January 26, 2012 8:00 AM ET
• The Earnings Press Release (Repeated)
- Eric -