Nokia Earnings Disappoint, Windows Phones Fall Short

The new Windows phones from Nokia and Microsoft Corp. (NASDAQ: MSFT) have not sold well, which is a blow to the fortunes of both companies. Microsoft’s success in the PC sector has begun to disappear, leaving mobile as one of the few industries in which it can grow.

According to the Nokia earnings announcement:

Nokia Group non-IFRS EPS in Q1 2013 was EUR -0.02; reported EPS was EUR -0.07.
– Nokia Group achieved underlying operating profitability for the third consecutive quarter, with a Q1 non-IFRS operating margin of 3.1%.
– Devices & Services achieved underlying profitability for the second consecutive quarter, with a Q1 non-IFRS operating margin of 0.1%. Devices & Services benefitted from a strong focus on cost as well as the reversal of approximately EUR 50 million of previously recognized inventory related allowances in Q1.
– Nokia Siemens Networks achieved underlying profitability for the fourth consecutive quarter, with a Q1 non-IFRS operating margin of 7.0%. Nokia Siemens Networks benefitted from strong gross margin performance in Q1.

Nokia Group net sales in Q1 2013 were EUR 5.9 billion
– Devices & Services Q1 net sales decreased 25% quarter-on-quarter to EUR 2.9 billion.
– Lumia Q1 volumes increased 27% quarter-on-quarter to 5.6 million units, reflecting increasing momentum.
– Mobile Phones Q1 volumes decreased 30% quarter-on-quarter to 55.8 million units, reflecting competitive industry dynamics and an estimated higher than normal seasonal decline in the market addressable by Mobile Phones.
– Nokia Siemens Networks net sales decreased 30% quarter-on-quarter to EUR 2.8 billion, reflecting industry seasonality

Those numbers were below expectations.