Nokia just published their Q2 2009 financial results. Profit has increased drastically, up 676.4% from last quarter, hitting 427 million EUR, which is still 71% less than the 1.47 billion EUR they made a year ago in Q2 2008. Nokia shipped 103.2 million devices, down 15% from the same time last year, but up 11% from Q1 2009. Average selling price of all their devices continues to drop, now reaching an all time low of 62 EUR. Regarding smartphones, Nokia shipped 16.9 million this quarter, compared with 15.3 million this time last year. Of those 16.9 million, 4.6 million were Nseries devices and 4.7 million were Eseries, which compared to Q1 2009 that had combined Nseries and Eseries volumes of 8.2 million, Nokia achieved an increase of over 1 million units. The Nokia 5800 alone shipped 3.7 million units this quarter, with a total of 6.8 million units since the device started shipping in November 2008. For all you in North America, Nokia lost even more market share, hitting 3.2% compared to 3.4% last quarter. For Nokia fanbois, you’ll be happy to hear that Nokia now commands 38% world wide market share, which is up from 37% last quarter, but down from the 40% it once had this time last year.
The saddest thing from these results, personally, is this quote: “Nokia now expects its market share in mobile devices to be approximately flat in 2009, compared with 2008. This is an update to Nokia’s earlier target to increase its market share in mobile devices in 2009.”
Nokia will be holding a conference call to discuss these results in a little less than 2 hours. I’m going to live blog it in this blog post after the jump. If you would like to listen to the call yourself, click here.
A few quick factoids as I re-read the 24 page Q2 2009 results PDF, this time a bit more carefully:
- 600,000 people have activated an Ovi Mail account. I wonder, how many of those are active users? I activated an Ovi Mail account just to see what it was like. I logged in once and never went back.
- The Nokia E71 reached the 5 million units sold threshold this quarter.
- This is the first quarter that the Nokia Eseries lineup has outsold the Nseries lineup. I hope those boys get a bonus, they deserve it; I <3 my E71!
- Compared to this time last year, there are actually 3% more Nokia employees! How many sub-contractors were lost during the cost savings effort? The world may never know.
Call to take place at 08:00 New York time, 15:00 Helsinki time. All times below will be in Helsinki time.
14:56: Joined the call. Four minutes early. The music is some cheesy 30 second euro-pop synthesizer sample that just loops. Over and over. Sort of like the S60 UI; ohhh snap!
14:59: Music suddenly switched to classical. Lots of noise on the line. Lowering volume to reduce probability of ear drums bleeding.
15:01: One minute late.
15:02: Two minutes late.
15:02: Regina will be our operator today. She sounds like a robot. Echo, echo, echo, echo …
15:03: ECHO ECHO ECHO ECHO ECHO
15:04: Christian from Nokia Investor Relations: “We’re making forward looking statements. If what we say doesn’t happen, well … what the fuck do you expect? We don’t have a DeLorean.”
15:05: Nokia CEO OPK: “We had a solid quarter; our supply chain is off the hook! Going forward however, we need to develop new skill sets because the mobile industry is undergoing fundamental changes. Nokia is turning into a solutions company. Forget about that internet company shit. It’s solutions company now, don’t forget that! The next billion people who connect to the internet will do it via mobile. We’re targeting those people, not the less than 100 million people who want to buy premium services and devices. We’re all about the low end. We have a lot of partners who have the same objectives we do: make a lot of money. We’re encouraging them to use Symbian to make money, which explains why they’ve switched to the Apple App Store environment. Focusing on the consumer is important. We’re setting 6 month benchmarks, tied to employee incentives. If they fuck up, they’ll still get their 4 week holiday, just no bonus. Our goal is to have 80 million Ovi users by the end of the year. Oh and of course I have to say we’re going to be open. It’s one of the hot buzz words in today’s mobile industry. By the end of 2011 we want to have 300 million active “Nokia” users. I meant to say Ovi. With all of these names, even I don’t know what our shit is called!”
15:13: OPK, still going: “I’m going to quote all the numbers we uploaded in our press release over an hour ago, just in case you can’t read. Judging by how Wall Street is performing, I don’t know if you fuckers can even subtract. Nokia Messaging is great, we’re partnering with a lot of operators. We forgot to put it on the Nokia N97, our flagship device however. My bad. Half a million Nokia N97s were built and shipped in June. NSN broke even in Q2, which is quite an accomplishment, the Chinese sell infrastructure equipment way cheaper than we do. We’re going to compete with services on top of our NSN equipment, since competing on price will be the death of us.”
15:20: Nokia CFO, Rick: “The economy is fucked. We’re working to make profit during these horrible times. We fired around 4,000 people, this number does not include 2,500 layoffs. The level of inventory in the channel has stabilized. People are finally stocking up at least 4 weeks of inventory in their warehouses. I’m going to invent a new word: solutions, which I’ll define as smartphones + services. We’re trying to be RIM. We’re both from cold countries. We both eat animals that look like Bambi. We will win. Now I’m going to read numbers from an Excel spread sheet that I ordered the interns to compile. A few of the components that Nokia uses are going to be hard to find in Q3. This is going to impact several hundreds of thousands of devices. I’m sure I’ll be asked about this during the Q&A section of this call. NSN is solid, don’t ask me about their numbers. Read the Excel. We expect NSN’s market share to have a moderate decline in Q3.”
15:20: Rick, he is still going: “Currency fluctuations are dicking with our numbers. That being said, let me keep on reading numbers from the press release that we published several hours before this call.”
15:33: Nokia CEO, OPK: “This was a hard quarter, I just want to repeat that fact. I do believe however, that we’re at an early stage of the mobile industry transforming. We ship the most amount of devices, and we make devices that hit every single price point.”
Question and Answer session
15:35: Mike from Piper Jaffray: “Can you give us some guidance as to what you think the most important thing that will be to impact your second half?”
15:36: Nokia CFO, Rick: “Not really Mike. I’ll repeat what I said about currency fluctuations. Our products are competitive. We’re going to “democratize” the smartphone market. The global recession/depression has not bottomed out yet.”
15:38: Didn’t catch this guy’s name, Credit Suisse: “Your margins, can you tell us what you’re going to do about them? Those components you’re going to have trouble finding in Q3, what type of components are they?”
15:39: Rick: “They’re actually a few components, I can’t tell you what they are, but they are for high end devices. I want to remind you, this issue will only impact us in Q3.”
15:40: OPK: “I want to add, we experience component shortages all the time. We’re working our ass off to reduce these shortages from happening.”
15:41: Mystery guy: “Do you think the N97 will have the same success as the N95?”
15:41: OPK: “With the economy today, and the amount of competition in the market place … I’m going to say no.”
15:42: Mark, forgot which analyst company: “Can you talk about working in the increased competitive market place?”
15:43: OPK: “Well, we have experience in the hardware business, and we’re working on increasing our solutions business. We want to expand our business, obviously. We no longer want to be in the product business.”
15:44: Rick: “Margins will be higher going forward when we combine hardware and services to create solutions. Remember the word I just invented? You’re going to hear me say it again. And again. And again. We need to become better at solutions, we know that.”
15:45: Stewart from Numurie: “You’re accelerating the pace of change towards solutions, but what exactly are you accelerating since you’re not really delivering, at least visibly.”
15:47: OPK: “We’re hiring a lot of new people, changing incentive structures, changing our ways of working as well. It isn’t one visible thing, especially forward facing, but we’re working from the inside first.”
15:48: Rick: “There are a lot of skeptics out there. People have been asking us: “Can you really change?” and I have to say yes. Day by day things are changing. Our benchmark, the one people will use to know if we have succeeded or not, is active users.”
15:50: Jeff, company unknown: “Where do you think ASPs are going in the second half?”
15:50: Nokia CFO, Rick: “We do sell a lot of cheap phones. Those next billion people I’ve talked about? They’re not buying the Nokia N97. Expect it to fall like it did going from Q1 to Q2 of this year.”
15:52: Rod from J.P. Morgan: “What the hell is an active user?” CLICK: Rod hung up!
15:53: Nokia CEO, OPK: “OK, well even though Rod is gone, let us answer his question: an active user is someone who we “maintain meaningful interaction” with. An active user is some one who uses a Nokia service, repeatedly.
15:54: Rod from J.P. Morgan: “Solutions, fancy word, but when are going to come out with them and when will they make a meaningful impact on your bottom line?”
15:55: Nokia CEO, OPK: “We make services first, and then put them on devices. Not the other way around.”
15:56: Garrett from UBS: “As a percentage, how many more units have you sold, not shipped, in Q2 versus Q1?”
15:57: Nokia CFO Rick and Nokia CEO OPK: “Most of the devices we announced in Q2, have not started shipping in volume. Look for our Q3 numbers to get a more accurate picture of our numbers.”
15:58: Garrett: “How are your sell out numbers? As in numbers not shipped, but actually shipped.”
15:59: Nokia CFO, Rick: “We don’t report that, others speculate on that.”
16:00: Richard from Arete: “NSN is not growing, how are you going to manage to make them grow? Also, market value versus market share, what is Nokia’s market value and how large do you think the market actually is in terms of value?”
16:01: Nokia CEO, OPK: “Regarding NSN, we’re not going to grow market share, but we’re going to offer more services with our equipment.”
16:01: Nokia CFO, Rick: “Regarding market value, I’m not going to give you a number since they’re highly debated. To get a good idea of how the value share is computed, look towards smartphones and the mid range.”
Two interesting slides:
Nokia admits that they need to learn a few new tricks:
Nokia will start including several new metrics including active users and solution ASPs starting with their Q3 2009 financial results:
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