Nokia Q4 results: impressive Asha growth, 197 EUR Lumia ASP (up 23%), Symbian officially dead. Good, but not enough yet
Another quarter another pre-announcement from Nokia.
Only, after a two year long string of profit warnings, we finally got an upside surprise. Nokia Q4 results will actually be better than expected.
How much better did Nokia do? Based on their Q3 guidance and earlier trends, I expected Nokia to ship a total 6.3 million smartphones – 2 million Symbians and 4.3 million Lumias. Nokia actually shipped 6.6 million smartphones, 2.2M – Symbian and 4.4M – Lumia. It is a little better than I expected, but not much.
One reason Q4 numbers are now looked at so positively, is that Nokia managed to lower the expectations to the rock bottom, and now exceeded them. After all, back in October when I looked into looked into Nokia Q3 results and Q4 guidance – I considered them “disaster with no hope in sight”. Three months later, the numbers are in, they are pretty much in-line with forecasts and both fans and bulls are ecstatic, with Nokia stock price up 16% on the news.
But it is not just a perception game. We’ll have to wait a couple more quarters to be sure, but there is a very real possibility that in Q4 2012 Nokia finally bottomed out, managed to stop its terminal decline, and a slow recovery is about to begin.
Here are the key highlights from today’s Nokia announcement:
- Lumia sales are growing again. They jumped an impressive 51% (from 2.9 to 4.4M) from Q3 to Q4. What’s more important – during Christmas quarter Nokia also sold more Lumias than it did in its previously best Q2 2012 (4.4M vs 4 million). Considering the supply constraints Nokia claims it has for Lumia 920 and limited launch markets, the results look pretty good. As Nokia ramps up its Windows Phone 8 volumes in countries like India, and, especially, China- with strong support from its biggest carrier – China Mobile, during New Year’s gift giving season – the growth prospects look rather good.
- Assuming Symbian device average selling prices stayed the same as in Q3, Lumia ASP jumped an impressive 23% – from 160EUR in Q3 to 197EUR in Q4. If Nokia is able to keep ASPs at that level, they may finally stop bleeding money by the billions and start generating cash once again.
- There was impressive growth in Nokia’s full-touch Asha line of phones. Sales jumped 43% from 6.5 million in Q3 to 9.3 million in Q4. It seams that Asha is holding its own, and even making some gains against the onslaught of cheap Androids. But we’ll have to see if this trends holds. For two years in a row Nokia tended to do really well in Q4 in low-end smartphones/higher end feature phones – keeping the rise of cheap Droids at bay. But, come Q1, the quality Android smartphones got to the next lower price level and Nokia sales in that segment were decimated. Will it happen this year too? Before Nokia reports in April, I have no idea. But then we will know whether Nokia’s bet on full touch Asha is paying off or not. We will also know whether this reclassification of Asha into a smartphone is just a cheap marketing gimmick, or whether it has some solid reasoning underneath.
- Q4 was the end of Symbian. According to Nokia’s CFO during results conference call “… going into Q1, we expect that Q4 is probably the last quarter where we have a meaningful Symbian volumes…”. So this is it. As of beginning of 2013, Symbian is officially dead.
All in all – some pretty encouraging numbers from Nokia today. And a hope of better things to come. With Symbian sales finally winding down – the drag on Nokia smartphone volumes is finally almost over. It still has to replace those 2.2 million Symbian devices it sold in Q4 with Lumias. But with increased availability Windows Phone 8 devices, and huge new markets opening up, that can be done in Q1. I expect Nokia’s smartphone volumes to stabilize around Q4’s 6.6 million unit level on the back of Lumia 920, 820 and 620. And then start growing from there in Q2 2012, when a new line of Lumia devices, announced during Mobile World Congress in February, starts shipping sometime in April/May.
Of course, to do that Nokia has to execute very well from now on. And after the years of missteps, my confidence in their execution is pretty low. We’ll have to watch Nokia Q1 and Q2 very carefully to see if things are really turning around. Is Nokia’s full touch Asha holding its own against cheap Androids? Is Lumia line growing and is the growth big enough to matter? Which way Nokia smartphone ASPs are trending? These questions are impossible to answer right now.
I turned extremely pessimistic about Nokia prospects when Q3 2012 numbers came in. As of today – I’m neutral to very cautiously optimistic. But, over the next 6 months, I will need positive answers to most of the questions above to be sure that Q4 wasn’t just a blip on Nokia’s long trajectory to oblivion. That things are really turning around.