TECH
01/26/2012 06:54 am ET Updated Mar 27, 2012

Nokia Q4 2011: Profits Nosedive, New Phones Yet To Take Off

By Tarmo Virki

HELSINKI (Reuters) - Nokia reported a 73 percent fall in fourth-quarter earnings as sales of its new Windows Phones failed to dent the dominance of Apple's iPhone or to compensate for diving sales of its own old smartphones.

The world's largest cellphone maker by volume unveiled a major strategy shift to Microsoft software for its smartphones last February in an attempt to challenge Apple and Google's Android. But Apple's phones in particular have proved far more popular.

Apple reported earlier this week sales of 37 million iPhones for the December quarter. Nokia has sold over 1 million Windows Phones since its launch in mid-November.

" is more than some were expecting, but it's not going to worry Apple or Google," said analyst Nick Dillon from research firm Ovum.

Nokia said it expects its phone business' underlying earnings to be around breakeven in the first quarter, with sales falling more than usual in the seasonally weaker quarter.

"The report highlights that the start of the Windows strategy is slow, and we have very little concrete data to predict its success at this point," said analyst Michael Schroder from FIM Securities.

"There are a lot of uncertainties. These are critical times for the future of the whole company. The next months will be extremely important".

SIILASMAA TO REPLACE OLLILA

Nokia's fourth-quarter core earnings per share of 0.06 euros were better than the market's expectation for 0.04 euros. The results were boosted by a $250 million payment from Microsoft as part of their Windows Phone sales deal.

Shares in the company climbed 5.3 percent to 4.27 euros after the results, helped also by Nokia's proposed 0.20 euros-per-share dividend for 2011, slightly more than expected.

Nokia's board proposed to name Risto Siilasmaa as its next chairman to replace long-time leader, Jorma Ollila, who is due to step down in May.

Siilasmaa, a 45-year old entrepreneur, has been a Nokia board member since 2008 and is known in Finland as the founder of software security company F-Secure, but has a low profile outside the country.

Its quarterly net loss totaled 1.1 billion euros ($1.43 bln), or 0.29 euros per share, due to a 1.1 billion euro writedown for its digital mapping assets. ($1 = 0.7708 euros)

(Additional reporting by Jussi Rosendahl, Terhi Kinnunen and Eero Vassinen; Editing by Jodie Ginsberg)

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