Read It And Weep: Nokia Q2 Loss Of Nearly €500 Million, Huge Declines

Nokia’s CEO Stephen Elop once said that his chief competitor is not Apple (NSDQ: AAPL), but if you compare today’s quarterly figures from Nokia (NYSE: NOK) with those of the Cupertino mobile upstart, the contrast couldn’t be greater.

Nokia today reported an operating loss of €487 million for the quarter, a decline of €782 million from the same quarter a year ago, when it made an operating profit of €295 million. The declines seen at the handset maker were near-total, represented by a string of negative percentages down the balance sheet.

The numbers reported today by Nokia emphasize how urgently the company needs to sort its strategy and new products out. Whether they will be something based on the Microsoft (NSDQ: MSFT) Windows Phone 7 promise or something that combines that with its pre-existing work in areas like the MeeGo OS, Nokia needs to get something catchy out, and pronto.

While some of Nokia’s declines are down to trends that Nokia would have already been seeing even before its Microsoft announcement, the current limbo state — abandoning old things like Symbian but not yet rolling out products on the new platforms — now looks like it could kill the company altogether (or finally make it that acquisition target that so many have reported it to be).

Some of the highlights (or should they be called lowlights?):

Sales declined by seven percent over last year to €9.275 billion; down 11 percent compared to last quarter.

Earnings per share also took a hammering, down by 45 percent to €0.06; 54 percent down from last quarter.

The company’s cash position from operating activities has also taken a nosedive. Last year the company had nearly €1 billion in net cash from operations; this year that figure is down to a debt of €176 million. Net cash from liquid assets was down by five percent from last year and now stands at €3.9 billion.

Every single device category saw declines in sales, from smartphones to featurephones. Before today’s results were posted, analysts thought the company would see a hit from reduced demand for low-end devices, but it was actually the smartphones that saw the biggest decline. That’s the counter point to results from the likes of Apple, which is running away with competitors’ business.

In sales, smart devices saw a decline of 33 percent, to €2.368 billion from €3.503 billion a year before; in volumes that worked out to a 34 percent decline to 16.7 million units. In comparison, Apple sold nearly 34 million units and the combined Android makers sold around 37 million, according to figures from analyst Benedict Evans.

— Regional breakdown. That advantage that Nokia had in China? It looks to have evaporated. The company saw declines in both sales and volume in the region. In fact, the only regions that didn’t see declines in sales (and should I hesitate to add “yet” there??) were Latin America and Africa; in volumes Latin America was the only one showing growth:

Mapping division Navteq and infrastructure JV Nokia Siemens Networks both saw a growth in revenues.

Stephen Elop, in the release, remained ever the optimist, emphasizing how everything we see here is the result of transformation: “While our Q2 results were clearly disappointing, we are executing well on the initiatives that are most important to our longer term competitiveness,” he writes in the release. “Some progress is already evident, and thus we are targeting to end this year with more net cash and liquid assets than at the end of Q2 2011.”

We’ll update with more during the results call at 8:00 AM ET.
Update: In the analyst call on the results, Stephen Elop confirmed (once more) that Nokia plans to launch its first Windows Phone handset by the end of this year. No turning back now.

On China: Elop said that some of the competitive pressures that Nokia has seen in the West are now spreading to new markets. Too much inventory also played a part, he said.

On using Windows Phone for lower-price-point devices: This is especially urgent considering the move for sub-$200 Android devices. Elop says that developing these are now “well under way.” But he was very vague about how this would work and also when we would see them.