World-leading mobile phone maker Nokia on Thursday posted deep 2011 losses amid slumping handset sales and as its first Windows-based smartphone, aimed at shoring up its flagging market share, struggled to get off the ground.
For all of 2011, the company posted a net loss of 1.2 billion euros ($1.5 billion), compared to a net profit of 1.8 billion euros a year earlier, while the final quarter of the year was hammered with a 1.07-billion-euro net loss after a profit of 745 million in the same period a year earlier.
Net sales for the October-December period meanwhile slumped 21 percent year-on-year to 10.0 billion euros, while sales for the full year were down nine percent at 38.66 billion euros.
The massive fall was nonetheless largely in line with, and even slightly better than analyst expectations, and Nokia's stock initially jumped nearly six percent after its earnings were made public.
Several analysts hinted the boost to its stock may in part have been a correction to the hammering it received earlier this week when two suppliers issued weak reports.
At the closing bell Thursday, the mobile phone giant was trading 2.66 percent higher on a Helsinki stock exchange up 2.33 percent.
Nokia chief executive Stephen Elop, who has been leading the company through a major restructuring, described the fourth quarter results as "a significant step in Nokia's transformation."
Elop, who last February announced the phasing out of Symbian as Nokia's smartphone platform in favour of a partnership with Microsoft, said he was pleased with the fourth quarter launch of its first phones on the Microsoft platform -- the Nokia Lumia 800 and the Nokia Lumia 710 -- seen as do-or-die for the company.
"We brought the new devices to market ahead of schedule, demonstrating that we are changing the clock speed of Nokia," he said.
Nokia said it had sold "well over one million" Lumia phones since the launch in October, as it established competitive "beachheads" in Europe, Hong Kong, India, Russia, Singapore, South Korea and Taiwan.
Nokia is depending heavily on the new phones to help maintain its ranking as the world's largest mobile phone maker as it operates in a rapidly changing landscape with RiM's Blackberry, Apple's iPhone and handsets running Google's Android platform take growing bites out of its market share.
But the new line could not counter its plunging sales in its overall smartphone business.
In the fourth quarter, Nokia sold just 19.6 million of the devices -- 31 percent fewer than in the same quarter of 2010 and far behind market-leader Apple, which reported 37 million units sold, and runner-up Samsung, which analysts expect will announce around 25 million smartphone sales in the quarter.
Pohjola Bank analyst Hannu Rauhala however stressed to AFP that "the fourth quarter figures don't tell much, as they (Nokia) are only now starting to launch the (Lumia) phones in different markets."
Nordea analyst Sami Sarkamies said most people who had tried Lumia were pleased with its performance, but added that the problem was "not too many have tried it."
Enthusiasm for the new smartphone may have perhaps been dampened by reports of battery life problems, with Nokia issuing a software fix this month.
That is bad news for the former undisputed world leader, which is desperate to stop the haemorrhaging of its market share.
The company announced last year it would no longer provide market share figures, which peaked at 40 percent in the first half of 2008, but Sarkamies estimated Nokia today holds only about 25 percent.
Going forward, Nokia said its Devices and Services division, which includes the smartphone business, would show an operating margin in the first quarter "around breakeven."
Analysts expressed disappointment with the "soft" outlook, with Sarkamies noting it indicated a "slow ramp-up of Lumia sales" -- a key element of the company's recovery strategy.
In a separate statement, Nokia meanwhile announced Risto Sillasmaa, a founder of the Finnish anti-virus company F-Secure, would take over as board chairman when Jorma Ollila steps down in May.
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