Oct. 18 (Bloomberg) -- Nokia Oyj, posting its sixth straight loss since adopting Microsoft Corp.’s Windows software, projected another “transition” quarter as it revamps its handset lineup to challenge the iPhone.
The third-quarter net loss widened to 969 million euros ($1.27 billion) from 68 million euros a year earlier, Espoo, Finland-based Nokia said today in a statement. Analysts had predicted a 657 million-euro loss, the average of estimates compiled by Bloomberg showed. Nokia said the last three months of the year will be “challenging” as it brings out new models.
Nokia has accumulated 4.8 billion euros in losses since Chief Executive Officer Stephen Elop started his bet in early 2011 on handsets using Windows. To reduce costs, Elop has cut more than 20,000 jobs and closed production and research sites as Nokia’s latest devices have failed to stop customer defections to Apple Inc.’s iPhone and devices running Google Inc.’s Android software.
“The core business of devices and services is still struggling,” said Lars Soederfjell, an analyst at Aalandsbanken in Stockholm. “It’s hard to say if they are out of the woods.”
Revenue dropped 19 percent to 7.24 billion euros, compared with the 7 billion-euro average analyst estimate. Sales of the flagship Lumia smartphone fell to 2.9 million units from the previous quarter’s 4 million.
Operating loss at the mobile-device unit will probably be 6 percent of sales this quarter when excluding some items, plus or minus 4 percentage points. That signals an improvement from the second quarter’s 9.1 percent and third quarter’s 7.4 percent.
Nokia’s shares added 1 percent to close at 2.22 euros in Helsinki. The stock has tumbled 41 percent this year, trading at 1996 level. Nokia, once the smartphone market leader, has lost almost 90 percent of its market value since Apple introduced the iPhone in 2007.
“It’s encouraging the losses aren’t widening, but they still need to reverse the handset plunge,” said Ilkka Rauvola, an analyst at Danske Bank A/S in Helsinki who recommends selling the stock.
Lumia sales fell as customers waited for the first Nokia models running the new Windows Phone 8 software, set to go on sale this quarter. Analysts had estimated 2.93 million Lumias sold, the average of six estimates compiled by Bloomberg.
Nokia sold 6.3 million smartphones and 76.6 million basic phones during the three months ended Sept. 30. Analysts projected sales of 6.84 million smartphones and 74.6 million basic phones.
Nokia, which controlled more than half of global smartphone sales before the first iPhone and Android devices were introduced, last year jettisoned its homemade Symbian software in favor of Windows. Smartphones running the Microsoft program have failed to threaten Apple and Google’s lead, having a market share of 2.7 percent in the second quarter compared with 83 percent for the iPhone and Android devices combined, according to Gartner Inc.
The new Lumia 920 and 820, set to hit store shelves in the next few weeks in the U.S. and Europe, are part of Nokia’s bid to challenge the iPhone 5 and Android devices such as Samsung Electronics Co.’s Galaxy S III in the year-end holiday-shopping period. The Lumia 920 has functions including augmented reality, which allows users to hold up their phone to see tips on stores and restaurants.
The fourth quarter will “continue the transition” as Nokia moves to the new Windows devices, Elop said on a conference call. He said Nokia, Microsoft and their carrier partners have increased marketing spending in preparation for the new models.
Excluding some items, the company reported an operating profit as losses in the devices business narrowed from the previous quarter.
Nokia’s net cash declined to 3.6 billion euros from 4.2 billion euros at the end of June. Its cash reserves have shrunk by about half in the past five years and will drop below 3 billion euros by year-end, Standard & Poor’s estimated in August. Nokia’s debt is at junk status with the three main rating companies.
Operating profit at Nokia Siemens Networks, the network joint venture with Germany’s Siemens AG, was 182 million euros, compared with a year-earlier loss. Sales at the unit rose 3 percent to 3.5 billion euros.
“The third-quarter result was roughly as expected with the exception of NSN that seemed to have performed somewhat better,” said Louis Landeman, an analyst at Danske Bank A/S in Stockholm.
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