Ina Fried

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Nokia Swings to Loss as Both Smartphone and Not-So-Smartphone Sales Dive

Not that anyone was expecting Nokia’s second quarter earnings report would be sunny, but ouch.

The company’s sales of 9.275 billion Euros were down 11 percent from the prior quarter and seven percent from a year ago, with the company posting a per-share loss of 10 Euro cents, compared to a per-share profit of nine Euro cents in the prior quarter and six Euro cents a year earlier.

The Finnish cellphone maker said that net sales in its core devices and services business dropped by 23 percent from the prior quarter and 20 percent from a year earlier. Smartphone revenue and unit sales saw an even steeper decline, with both down more than 30 percent from both prior quarter and year-ago results.

While acknowledging the results were “disappointing,” CEO Stephen Elop offered up a positive take on the recent actions taken by the company, including cutting prices in some areas, changing leadership on the sales side and accelerating its plans to cut costs.

“The challenges we are facing during our strategic transformation manifested in a greater than expected way in Q2,” Elop said in a statement. “However, even within the quarter, I believe our actions to mitigate the impact of these challenges have started to have a positive impact on the underlying health of our business. Most importantly, we are making better-than-expected progress toward our strategic goals.”

Looking ahead, the company didn’t provide much in terms of long-term guidance “due to limited visibility,” but said that for the current quarter it expects its core devices and services business “to be slightly above break-even, ranging either above or below this level by approximately 2 percentage points.”

The company is hoping to have its first Microsoft Windows Phone devices on sale later this year, with smartphone unit head Jo Harlow suggesting in a recent interview that more than a single model is possible.

“I’m committed to one model this year,” Harlow said. “More would be great.”

But even if Nokia can launch those phones successfully sooner than later, it will still take at least a few really rough quarters like this one to show any difference from the WP7 phones.

In other words, strap in — it’s going to be an even bumpier ride.

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