Nokia Writes Off €220m in Handset Losses

The OEM is pinning its hopes on Windows Phone 8

Handset giant Nokia has written-off some €220m (£172m) in unsold handsets as the company made an operating loss of €827m in Q2, 2012. The loss includes a one-off restructuring charge, the underlying loss is €327m, a small decrease on the previous year.

The company made the write-off for unsold and redundant Symbian, MeeGo and Lumia handsets, but is pinning its hopes on the launch of Windows Phone 8 later this year.

"We shipped 4m Lumia Smartphones in Q2, and we plan to provide updates to current Lumia products over time, well beyond the launch of Windows Phone 8. We believe the Windows Phone 8 launch will be an important catalyst for Lumia," says Nokia chief executive Stephen Elop. "Nokia is taking action to manage through this transition period. While Q2 was a difficult quarter, Nokia employees are demonstrating their determination to strengthen our competitiveness, improve our operating model and carefully manage our financial resources."

Nokia sold 4m of its Microsoft-powered Lumia smartphones over the quarter - an increase compared to the previous quarter, and total sales increased from €7.4bn to €7.5bn. 

Julian Jest, handsets and devices research analyst at Informa Telecoms & Media, thinks that in spite of these results, Nokia is right to persevere with Windows Phone. "Lumia sales have picked up in 2Q12, particularly in North America, a key market in which Nokia has struggled in recent times, and the release of Windows 8 across multiple platforms, including its Surface Tablets, will provide the consumer with more exposure to the OS's unique features and benefits, and will give the boost in sales that Nokia needs," he says. "However, the biggest challenge that lies ahead for Nokia is maintaining its market share in China where it faces tough competition from local brands. Admittedly Nokia is running out of time - however, it still has sufficient cash to make it through subsequent quarters, and is willing to do whatever it takes, whether it be decreasing its work force or spinning off parts of the business not relevant to its central strategy, such as luxury phone brand Vertu."