Cheaper Lumias boost Nokia’s smartphone sales, but stock falls as analyst estimates missed

Nokia CEO Stephen Elop

Apparently people buy more of your smartphones if you put out cheaper versions. That’s the key takeaway from Nokia’s latest results, issued on Thursday.

Sales of the Finnish firm’s Lumia Windows Phone handsets were up 32 percent quarter-on-quarter, with 7.4 million units being sold in Q2 of this year as opposed to 5.6 million in Q1. That said, sales of Nokia’s non-smart handsets (the non-touch Ashas) were down 4 percent to 53.7 million units, meaning a 6 percent quarter-on-quarter drop to €2.7 billion ($3.5 billion) for the Devices and Services unit as a whole.

The mid-range Lumia 720 and low-end Lumia 520 are the heroes here. Here’s what Nokia CEO Stephen Elop said in a statement:

“We are very proud of the recent creations by our Lumia team, from the Lumia 520 — our most affordable Windows Phone 8 product which has enjoyed a strong start in markets like China, France, India, Thailand, the UK, the U.S. and Vietnam – to the Lumia 1020, our star imaging product which we unveiled to the world last week.

“Overall, Lumia volumes grew to 7.4 million in the second quarter, the highest for any quarter so far and showing increasing momentum for the ecosystem. During the third quarter, we expect that our new Lumia products will drive a significant part of our Smart Devices revenue.”

To my mind, Nokia’s most intriguing device at the moment is the Asha 501, a full-touch handset that retails at less than $100 while doing most of the social stuff smartphone users require. Elop said Nokia was “very encouraged by the consumer response to [its] innovations in this price category,” but the firm would “take actions” to make its dumber-phone offerings more focused and competitive – the key rivals there are super-cheap Android and BlackBerry phones, and now the dark horse that is Firefox OS.

Nokia Siemens Networks (NSN) achieved underlying profitability, but sales were down 1 percent to €2.8 billion. Nokia said this was a reflection of a “focused strategy” – that whole division is in flux anyway, as Nokia is in the process of buying out Siemens’s stake. The other interesting part of the results was HERE, Nokia’s open-ish mapping platform. Sales were up 8 percent quarter-on-quarter, reaching €233 million.

Of course, while the quarter-on-quarter picture looks vaguely positive, the year-on-year view shows Nokia still has a way to go. The company’s net loss may be down from €1.4 billion (Q2 2012) to €227 million million (Q2 2013), but sales are down 24 percent over the same period, from €7.5 billion to €5.7 billion.

This has disappointed analysts, who were hoping for sales in the region of €6.4 billion and a quarterly loss of €258.8 million. Nokia’s stock fell by almost 4 percent (at the time of writing) on the Helsinki Stock Exchange after the results came out – the company remains in choppy waters.

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