Thoughts on Nokia's Q4-2012

Nokia's smart devices (smart phones) have reached a paradigm shift, where Symbian sales are now the minority position, and Windows Phone sales are the majority.  This has resulted in a 20% jump in revenue per handset.  Along with lower costs (all those layoffs and the one-time charges), their Devices and Services division's profit has soared.  Correspondingly, Nokia's total profit has jumped as well.  That's the good news.

But -- and you know there was a but coming -- total smart phone sales only increased by 300,000 units (4.8%).  Also, you can now see, that the early pre-announcement of Windows Phone 8, by Steve Ballmer, did hurt sales of Windows Phone 7 devices significantly, for Nokia, and probably all other WP manufacturers.  The quarter before Microsoft's announcement of WP8, Nokia sold 4M Lumia handsets.  The quarter of the announcement, Nokia sold just 2.9M Lumia handsets.  With the latest quarter results, Nokia's sales rebounded with 4.4M Lumia handsets.

Even with this huge increase in Lumia sales, it does not mean that Nokia's future has improved.  Nokia's own quarterly report stated that Q1-2013 could be anywhere between 2% increase or 6% decrease in non-IFRS operating margin -- this is clearly reflected in each of the previous two first quarters (2011 and 2012).  Put slightly different, and Q4 has been an anomaly (Christmas bump), in the generally downward spiral.

So even with great pronouncements of a turnaround, I would be disinclined to believe that there is any proof of such, at least until Q2.