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Nokia Oyj — Interim / Quarterly Report 2012
Oct 18, 2012
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Interim / Quarterly Report
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UK Regulatory | 18 October 2012 12:00
Nokia Corporation Q3 2012 Interim Report
Nokia / 3rd Quarter Results
18.10.2012 12:00
Dissemination of a UK Regulatory Announcement, transmitted by
DGAP - a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.
Nokia Corporation
Interim report
October 18, 2012 at 13.00 (CET+1)
This is a summary of the third quarter 2012 interim report published today. The
complete third quarter 2012 interim report with tables is available at
http://www.results.nokia.com/results/Nokia_results2012Q3e.pdf. Investors
should not rely on summaries of our interim reports only, but should review the
complete interim reports with tables.
FINANCIAL AND OPERATING HIGHLIGHTS
Nokia Group non-IFRS EPS in Q3 2012 of EUR -0.07, reported EPS EUR -0.26
- Nokia Group achieves operating profitability on an underlying basis, with Q3
non-IFRS operating margin of 1.1%.
- Nokia Siemens Networks non-IFRS operating margin significantly improved
quarter-on-quarter and year-on-year to 9.2% in Q3; company executing well on
restructuring and strategy that focuses on key markets and product segments.
- Devices & Services Q3 non-IFRS operating margin improved quarter-on-quarter
to negative 7.4%.
- Nokia Group ended Q3 with gross cash of EUR 8.8 billion and net cash of EUR
3.6 billion.
- Nokia Group Q3 net cash from operating activities of negative EUR 429
million, including cash outflows related to restructuring activities of
approximately EUR 390 million.
Nokia Group net sales in Q3 2012 were EUR 7.2 billion, down from EUR 7.5
billion in Q2 2012
- Nokia Siemens Networks net sales increased quarter-on-quarter and
year-on-year to EUR 3.5 billion.
- Lumia Q3 volumes decreased quarter-on-quarter to 2.9 million units, as we
shared the exciting innovation ahead with our new line of Lumia products.
- Mobile Phones Q3 volumes increased quarter-on-quarter to 77 million units;
strong sales start for new Asha full touch smartphones, with volumes of 6.5
million units.
Commenting on the Q3 results, Stephen Elop, Nokia CEO, said:
'As we expected, Q3 was a difficult quarter in our Devices & Services business;
however, we are pleased that we shifted Nokia Group to operating profitability
on a non-IFRS basis.
In Q3, we continued to manage through a tough transitional quarter for our
smart devices business as we shared the exciting innovation ahead with our new
line of Lumia products.
In our mobile phones business, the positive consumer response to our new Asha
full touch smartphones translated into strong sales. And in Q3, our mobile
phones business delivered a solid quarter with sequential sales growth and
improved contribution margin.
In Location & Commerce, we made progress establishing our platform offering
with customers like Amazon. This is in line with our plan to expand our
location offering to more customers.
And, Nokia Siemens Networks had a remarkable quarter in which we achieved
record profitability on a non-IFRS basis and the Nokia Siemens Networks cash
balance increased for the fourth quarter in a row.
While we continue to focus on transitioning Nokia, we are determined to
carefully manage our financial resources, improve our competitiveness, return
our Devices & Services business to positive operating cash flow as quickly as
possible, and ultimately provide more value to our shareholders.'
SUMMARY FINANCIAL INFORMATION
Reported and Non-IFRS
third quarter 2012 results1,2,3
EUR million Q3/2012 Q3/2011 YoY Q2/2012 QoQ
Change Change
Nokia
Net sales 7 239 8 980 -19% 7 542 -4%
Operating profit -576 -71 -826
Operating profit 78 252 -69% -327
(non-IFRS)
Operating margin % -8.0% -0.8% -11.0%
Operating margin % (non-IFRS) 1.1% 2.8% -4.3%
EPS, EUR diluted -0.26 -0.02 -0.38
EPS, EUR diluted -0.07 0.03 -0.08
(non-IFRS)4
Net cash from -429 852 102
operating
activities
Net cash and 3 564 5 067 -30% 4 197 -15%
other liquid
assets5
Devices &
Services6
Net sales 3 563 5 392 -34% 4 023 -11%
Smart Devices 976 2 194 -56% 1 541 -37%
net sales
Mobile Phones 2 366 2 915 -19% 2 291 3%
net sales
Mobile device 82.9 106.6 -22% 83.7 -1%
volume
(mn units)
Smart Devices 6.3 16.8 -63% 10.2 -38%
volume
(mn units)
Mobile Phones 76.6 89.8 -15% 73.5 4%
volume
(mn units)
Mobile device 43 51 -16% 48 -10%
ASP7
Smart Devices 155 131 18% 151 3%
ASP7
Mobile Phones 31 32 -3% 31 0%
ASP7
Operating -683 168 -474
profit
Operating -263 258 -365
profit
(non-IFRS)
Operating -19.2% 3.1% -11.8%
margin %
Operating margin % -7.4% 4.8% -9.1%
(non-IFRS)
Location &
Commerce6
Net sales 265 282 -6% 283 -6%
Operating profit -56 -85 -95
Operating profit 37 28 32% 41 -10%
(non-IFRS)
Operating -21.1% -30.1% -33.6%
margin %
Operating 14.0% 9.9% 14.5%
margin %
(non-IFRS)
Nokia Siemens
Networks6
Net sales 3 501 3 413 3% 3 343 5%
Operating profit 182 -114 -227
Operating profit 323 6 27
(non-IFRS)
Operating 5.2% -3.3% -6.8%
margin %
Operating 9.2% 0.2% 0.8%
margin %
(non-IFRS)
Note 1 relating to January-September 2012 results: Nokia reported net sales
were EUR 22 135 million and reported EPS (diluted) was EUR -0.89 for the period
from January 1 to September 30, 2012. Further information about the results for
the period from January 1 to September 30, 2012 can be found on pages 20, 27,
28 and 31 of the complete Q3 2012 interim report with tables.
Note 2 relating to non-IFRS results: Non-IFRS results exclude special items for
all periods. In addition, non-IFRS results exclude intangible asset
amortization, other purchase price accounting related items and inventory value
adjustments arising from (i) the formation of Nokia Siemens Networks and (ii)
all business acquisitions completed after June 30, 2008. Nokia believes that
our non-IFRS results provide meaningful supplemental information to both
management and investors regarding Nokia's underlying performance by excluding
the above-described items that may not be indicative of Nokia's business
operating results. These non-IFRS financial measures should not be viewed in
isolation or as substitutes to the equivalent IFRS measure(s), but should be
used in conjunction with the most directly comparable IFRS measure(s) in the
reported results. See note 3 below for information about the exclusions from
our non-IFRS results. More information, including a reconciliation of our Q3
2012 and Q3 2011 non-IFRS results to our reported results, can be found in our
complete Q3 2012 interim report with tables on pages 19 and 22-26. A
reconciliation of our Q2 2012 non-IFRS results to our reported results can be
found in our complete Q2 interim report with tables on pages 21-25 published on
July 19, 2012.
Note 3 relating to non-IFRS exclusions:
Q3 2012 - EUR 654 million (net) consisting of:
- EUR 74 million restructuring charge and other associated items in Nokia
Siemens Networks, including EUR 3 million of net charges related to country and
contract exits based on new strategy that focuses on key markets and product
segments.
- EUR 2 million restructuring charge in Location & Commerce
- EUR 454 million restructuring charge and other associated items in Devices &
Services
- EUR 67 million of intangible asset amortization and other purchase price
accounting related items arising from the formation of Nokia Siemens Networks
and the acquisition of Motorola Solutions' networks assets
- EUR 91 million of intangible asset amortization and other purchase price
accounting related items arising from the acquisition of NAVTEQ
- EUR 1 million of intangible assets amortization and other purchase price
related items arising from the acquisition of Novarra, MetaCarta and Motally in
Devices & Services
- EUR 35 million positive item from a cartel claim settlement in Devices &
Services
Q3 2012 taxes - EUR 157 million non-cash deferred tax expense related to
corporate reorganizations arising from Location & Commerce business
integration.
Q2 2012 - EUR 499 million consisting of:
- EUR 190 million restructuring charge and other associated items in Nokia
Siemens Networks, including EUR 70 million of charges related to country and
contract exits based on new strategy that focuses on key markets and product
segments.
- EUR 10 million restructuring charge in Location & Commerce
- EUR 80 million restructuring charge and associated impairments EUR 28 million
in Devices & Services
- EUR 64 million of intangible asset amortization and other purchase price
accounting related items arising from the formation of Nokia Siemens Networks
and the acquisition of Motorola Solutions' networks assets
- EUR 126 million of intangible asset amortization and other purchase price
accounting related items arising from the acquisition of NAVTEQ
- EUR 1 million of intangible assets amortization and other purchase price
related items arising from the acquisition of Novarra, MetaCarta and Motally in
Devices & Services
Q2 2012 taxes - EUR 800 million valuation allowances for Devices & Services
deferred tax assets adversely affecting Nokia taxes
Q3 2011 - EUR 323 million (net) consisting of:
- EUR 26 million restructuring charge and other associated items in Nokia
Siemens Networks
- EUR 59 million restructuring charge and EUR 54 million associated impairments
in Devices & Services
- EUR 24 million positive Accenture deal closing adjustment in Devices &
Services
- EUR 94 million of intangible asset amortization and other purchase price
accounting related items arising from the formation of Nokia Siemens Networks
and the acquisition of Motorola Solutions' networks assets
- EUR 113 million of intangible asset amortization and other purchase price
accounting related items arising from the acquisition of NAVTEQ
- EUR 1 million of intangible assets amortization and other purchase price
related items arising from the acquisition of Novarra, MetaCarta and Motally in
Devices & Services
Note 4 relating to non-IFRS Nokia EPS:
Nokia taxes were unfavorably impacted by Devices & Services taxes as no tax
benefits are recognized for certain Devices & Services deferred tax items. If
Nokia's earlier estimated long-term tax rate of 26% had been applied, non-IFRS
Nokia EPS would have been approximately 4.2 Euro cent higher in Q3 2012. Going
forward on a non-IFRS basis, until a pattern of tax profitability is
reestablished, Nokia expects to record quarterly tax expense of approximately
EUR 50 million related to its Devices & Services business and approximately EUR
50 million related to its Nokia Siemens Networks business. Nokia expects to
continue to record taxes related to its Location & Commerce business at a 26%
rate.
Note 5 relating to Nokia net cash and other liquid assets: Calculated as total
cash and other liquid assets less interest-bearing liabilities. For selected
information on Nokia Group interest-bearing liabilities, please see the table
on page 33 of the complete Q3 2012 interim report with tables
Note 6 relating to operational and reporting structure: We adopted our current
operational structure during 2011 and have three businesses: Devices &
Services, Location & Commerce and Nokia Siemens Networks and four operating and
reportable segments: Smart Devices and Mobile Phones within Devices & Services,
Location & Commerce and Nokia Siemens Networks. Smart Devices focuses on
smartphones and Mobile Phones focuses on mass market mobile devices, including
Asha full touch smartphones. Devices & Services also contains Devices &
Services Other which includes net sales of our luxury phone business Vertu,
spare parts and related cost of sales and operating expenses, as well as
intellectual property related income and common research and development
expenses. In October 2012, we completed the divestment of Vertu to EQT VI, a
European private equity firm. Location & Commerce focuses on the development
of location-based services and local commerce. Nokia Siemens Networks is one of
the leading global providers of telecommunications infrastructure hardware,
software and services.
Note 7 relating to average selling prices (ASP): Mobile device ASP represents
total Devices & Services net sales (Smart Devices net sales, Mobile Phones net
sales, and Devices & Services Other net sales) divided by total Devices &
Services volumes. Devices & Services Other net sales includes net sales of
Nokia's luxury phone business Vertu and spare parts, as well as intellectual
property income. Smart Devices ASP represents Smart Devices net sales divided
by Smart Devices volumes. Mobile Phones ASP represents Mobile Phones net sales
divided by Mobile Phones volumes.
NOKIA OUTLOOK
- Nokia expects its non-IFRS Devices & Services operating margin in the fourth
quarter 2012 to be approximately negative 6%, plus or minus four percentage
points. This outlook is based on our expectations regarding a number of
factors, including: - competitive industry dynamics continuing to negatively affect the Smart
Devices and Mobile Phones business units; - the fourth quarter being a ramp up quarter for our new Lumia products, which
are expected to start selling in select markets; - consumer demand, particularly related to our current Lumia products;
- an expected increase in Devices & Services operating expenses as a result of
new product launches, partially offset by expected cost reductions under our
restructuring program; and -
the macroeconomic environment.
-
Nokia expects the fourth quarter 2012 to be a challenging quarter in Smart
Devices, with a lower-than-normal benefit from seasonality in volumes,
primarily due to product transitions and our ramp up plan for our new devices. - Nokia continues to target to reduce its Devices & Services non-IFRS operating
expenses to an annualized run rate of approximately EUR 3.0 billion by the end
of 2013. - Nokia and Nokia Siemens Networks expect Nokia Siemens Networks non-IFRS
operating margin in the fourth quarter 2012 to be approximately positive 8%,
plus or minus four percentage points. This outlook is based on our
expectations regarding a number of factors, including: - competitive industry dynamics;
- seasonal variations in customer demand for Nokia Siemens Networks' equipment
and services; - regional and product mix;
- expected continued improvement under Nokia Siemens Networks' restructuring
program; and -
the macroeconomic environment.
-
Nokia Siemens Networks continues to target to reduce its non-IFRS annualized
operating expenses and production overheads by EUR 1 billion by the end of
2013, compared to the end of 2011.
THIRD QUARTER 2012 FINANCIAL AND OPERATING DISCUSSION
NOKIA GROUP
We adopted our current operational structure during 2011 and have three
businesses: Devices & Services, Location & Commerce and Nokia Siemens Networks
and four operating and reportable segments: Smart Devices and Mobile Phones
within Devices & Services, Location & Commerce and Nokia Siemens Networks.
Smart Devices focuses on smartphones and Mobile Phones focuses on mass market
mobile devices, including Asha full touch smartphones. Devices & Services also
contains Devices & Services Other which includes net sales of our luxury phone
business Vertu, spare parts and related cost of sales and operating expenses,
as well as intellectual property related income and common research and
development expenses. In October 2012, we completed the divestment of Vertu to
EQT VI, a European private equity firm. Location & Commerce focuses on the
development of location-based services and local commerce. Nokia Siemens
Networks is one of the leading global providers of telecommunications
infrastructure hardware, software and services.
The following discussion includes non-IFRS results information. Non-IFRS
results exclude special items for all periods. In addition, non-IFRS results
exclude intangible asset amortization, other purchase price accounting related
items and inventory value adjustments arising from (i) the formation of Nokia
Siemens Networks and (ii) all business acquisitions completed after June 30,
2008.
The following table sets forth the year-on-year and sequential growth rates in
our net sales on a reported basis and at constant currency for the periods
indicated.
THIRD QUARTER 2012 NET SALES,
REPORTED & CONSTANT CURRENCY1
YoY Change QoQ Change
------------------------------------------------------------
Group net sales - reported -19% -4%
Group net sales - constant currency1 -23% -7%
Devices & Services -34% -11%
net sales - reported
Devices & Services -36% -13%
net sales - constant currency1
Nokia Siemens Networks 3% 5%
net sales - reported
Nokia Siemens Networks -3% 1%
net sales - constant currency1
Note 1: Change in net sales at constant currency excludes the impact of changes
in exchange rates in comparison to the Euro, our reporting currency.
At constant currency Nokia Group's net sales would have decreased 23%
year-on-year and decreased 7% sequentially.
The following table sets forth Nokia Group's reported cash flow for the periods
indicated and financial position at the end of the periods indicated, as well
as the year-on-year and sequential growth rates.
NOKIA GROUP CASH FLOW
AND FINANCIAL POSITION
EUR million Q3/2012 Q3/2011 YoY Q2/2012 QoQ
Change Change
Net cash from -429 852 102
operating activities
Total cash and 8 779 10 809 -19% 9 418 -7%
other liquid assets
Net cash and 3 564 5 067 -30% 4 197 -15%
other liquid assets1
Note 1: Total cash and other liquid assets minus interest-bearing liabilities.
Year-on-year, net cash and other liquid assets decreased by EUR 1.5 billion in
the third quarter 2012, primarily due to cash outflows related to restructuring
and net financial expenses, the payment of the annual dividend totaling EUR 742
million in the second quarter 2012 and capital expenditures, partially offset
by cash flows related to the receipt of quarterly platform support payments
from Microsoft (which commenced in the fourth quarter 2011) and positive
overall net cash from operating activities, excluding cash outflows related to
restructuring and net financial expenses.
Sequentially, net cash and other liquid assets decreased by EUR 633 million in
the third quarter 2012, primarily due to cash outflows related to
restructuring, cash outflows related to net financial expenses, Devices &
Services operating losses as well as capital expenditures, partially offset by
positive Nokia Siemens Networks operating profits and the receipt of a USD 250
million (approximately EUR 202 million) quarterly platform support payment from
Microsoft.
In the third quarter 2012, Nokia Siemens Networks' contribution to net cash
from operating activities was approximately EUR 320 million, primarily due to
net profit adjusted for non-cash items. At the end of the third quarter 2012,
Nokia Siemens Networks' contribution to the Nokia gross cash was EUR 2.0
billion and contribution to Nokia's net cash was EUR 620 million.
Our agreement with Microsoft includes platform support payments from Microsoft
to us as well as software royalty payments from us to Microsoft. In the third
quarter 2012, we received a quarterly platform support payment of USD 250
million (approximately EUR 202 million). Under the terms of the agreement
governing the platform support payments, the amount of each quarterly platform
support payment is USD 250 million. We have a competitive software royalty
structure, which includes annual minimum software royalty commitments. Minimum
software royalty commitments are paid quarterly. Over the life of the
agreement, both the platform support payments and the minimum software royalty
commitments are expected to measure in the billions of US dollars. The total
amount of the platform support payments is expected to slightly exceed the
total amount of the minimum software royalty commitments. In accordance with
the contract terms, the platform support payments and annual minimum software
royalty commitment payments continue for a corresponding period of time.
DEVICES & SERVICES
The following table sets forth a summary of the results for our Devices &
Services business for the periods indicated, as well as the year-on-year and
sequential growth rates.
DEVICES & SERVICES
RESULTS SUMMARY
Q3/2012 Q3/2011 YoY Q2/2012 QoQ
Change Change
Net sales (EUR million)1 3 563 5 392 -34% 4 023 -11%
Mobile device volume 82.9 106.6 -22% 83.7 -1%
(million units)
Mobile device ASP (EUR) 43 51 -16% 48 -10%
Non-IFRS gross margin (%) 18.5% 25.7% 18.1%
Non-IFRS operating 915 1 126 -19% 1 090 -16%
expenses (EUR million)
Non-IFRS operating -7.4% 4.8% -9.1%
margin (%)
Note 1: Includes IPR income recognized in Devices & Services Other net sales.
The year-on-year and sequential changes in our Devices & Services net sales,
volumes, average selling prices and gross margin are discussed below under our
Smart Devices and Mobile Phones business units. On a year-on-year basis Devices
& Services Other net sales were lower in the third quarter 2012 primarily due
to the recognition in the third quarter 2011 of approximately EUR 70 million of
non-recurring IPR income. In the third quarter 2012, Devices & Services Other
net sales benefitted from sequentially higher IPR income.
We estimate that our current annual IPR income run-rate is approximately EUR
0.5 billion.
We ended the third quarter 2012 within the normal 4 to 6 week channel inventory
range. On an absolute unit basis and in days of supply channel inventories
declined sequentially.
Net Sales and Volumes by Geographic Area
The following table sets forth the net sales for our Devices & Services
business for the periods indicated, as well as the year-on-year and sequential
growth rates, by geographic area. IPR income is allocated to the geographic
areas contained in this chart.
DEVICES & SERVICES NET SALES
BY GEOGRAPHIC AREA
EUR million Q3/2012 Q3/2011 YoY Q2/2012 QoQ
Change Change
Europe 985 1 394 -29% 1 096 -10%
Middle East & Africa 682 957 -29% 663 3%
Greater China 278 1 240 -78% 542 -49%
Asia-Pacific 977 1 197 -18% 948 3%
North America 36 73 -51% 128 -72%
Latin America 605 531 14% 646 -6%
Total 3 563 5 392 -34% 4023 -11%
The following table sets forth the mobile device volumes for our Devices &
Services business for the periods indicated, as well as the year-on-year and
sequential growth rates, by geographic area.
DEVICES & SERVICES MOBILE DEVICE
VOLUMES BY GEOGRAPHIC AREA
million units Q3/2012 Q3/2011 YoY Q2/2012 QoQ
Change Change
Europe 16.8 20.7 -19% 15.3 10%
Middle East & Africa 19.1 26.0 -27% 19.4 -2%
Greater China 5.8 15.9 -64% 7.9 -27%
Asia-Pacific 30.1 32.4 -7% 28.6 5%
North America 0.3 0.7 -57% 0.6 -50%
Latin America 10.8 10.9 -1% 11.9 -9%
Total 82.9 106.6 -22% 83.7 -1%
On a year-on-year basis, the decreases in Greater China net sales and volumes
were primarily due to Symbian.
On a year-on-year basis, the decreases in North America net sales and volumes
were primarily due to Mobile Phones.
The sequential decreases in net sales and volumes in North America were
primarily due to lower operator and distributor demand for Lumia as well as our
efforts to prepare the distribution channel for the upcoming sales start of new
devices.
Net sales in China decreased sequentially primarily due to lower net sales of
our Lumia and Symbian devices, primarily reflecting competitive pressures.
Volumes in China decreased sequentially primarily due to lower volumes of our
Symbian devices, primarily reflecting competitive pressures.
Net sales in Europe decreased sequentially primarily due to lower net sales of
our Symbian and Lumia products, partially offset by higher net sales of our
Mobile Phones devices. Volumes in Europe increased sequentially primarily due
to higher volumes of our Mobile Phones devices, partially offset by lower
volumes of our Symbian and Lumia products.
At constant currency Devices & Services' net sales would have decreased 36%
year-on-year and decreased 13% sequentially.
Operating Expenses
Devices & Services non-IFRS operating expenses decreased 19% year-on-year and
16% sequentially in the third quarter 2012. On a year-on-year basis, operating
expenses related to Mobile Phones and Smart Devices decreased 3% and 33%,
respectively, in the third quarter 2012. In addition to the factors described
below, the year-on-year changes resulted from the proportionate allocation of
operating expenses being affected by the relative mix of sales and gross profit
performance between Mobile Phones and Smart Devices. This resulted in higher
and lower relative allocations to Mobile Phones and Smart Devices,
respectively. On a sequential basis, operating expenses related to Mobile
Phones and Smart Devices decreased by 13% and 18%, respectively, in the third
quarter 2012.
Devices & Services non-IFRS research and development expenses decreased 21%
year-on-year in the third quarter 2012. On a sequential basis, Devices &
Services non-IFRS research and development expenses decreased 14% in the third
quarter 2012. Both the year-on-year and sequential declines were primarily due
to cost reductions related to ramping down Symbian and MeeGo activities, the
focusing of our efforts and reductions in certain projects within Mobile
Phones, and overall cost controls.
Devices & Services non-IFRS sales and marketing expenses decreased 17%
year-on-year in the third quarter 2012. Year-on-year, marketing expenses
declined primarily due to lower marketing expenditure on Symbian as well as
cost controls, partially offset by higher marketing expenditure on Lumia
products. On a sequential basis, Devices & Services non-IFRS sales and
marketing expenses decreased 23% in the third quarter 2012. Sequentially,
marketing expenses decreased primarily due to lower expenditure on Lumia
products following the North America launch in the second quarter, headcount
reductions and cost controls.
Devices & Services non-IFRS administrative and general expenses decreased 16%
year-on-year in the third quarter 2012 primarily related to cost savings in
support functions, particularly in IT and real estate management and shared
function cost categorization. On a sequential basis, Devices & Services
non-IFRS administrative and general expenses increased 31% in the third quarter
2012 due to shared function cost categorization which more than offset cost
savings in support functions.
In the third quarter 2012, Devices & Services non-IFRS other income and expense
had a negative year-on-year and sequential impact on profitability. On a
reported basis, other income and expense was significantly adversely affected
in the third quarter 2012 primarily as a result of restructuring-related
expenses discussed below, which were recognized in Devices & Services Other.
Operating Margin
The lower year-on-year Devices & Services non-IFRS operating margin in the
third quarter 2012 was primarily due to lower net sales and gross margin,
partially offset by lower operating expenses.
The sequentially higher Devices & Services non-IFRS operating margin in the
third quarter 2012 was primarily due to lower operating expenses as well as
slightly higher gross margin.
Cost Reduction Activities and Planned Operational Adjustments
DEVICES & SERVICES
RESTRUCTURING SUMMARY
- EUR Q3/2012 Cumulative up to Q4/2012 2013 Total
(million (approxim Q3/2012 (approximate (approximate (approximate
) ate) (approximate) estimate) estimate) estimate)
Restructu 454 1 400 Not provided Not provided 1 800
ring
related
charges
Restructu 200 800 400 400 1 600
ring
related
cash
outflows
Nokia continues to target to reduce its Devices & Services non-IFRS operating
expenses to an annualized run rate of approximately EUR 3.0 billion by the end
of 2013.
At the end of the third quarter 2012, Devices & Services and Corporate Common
had approximately 38 000 employees, a reduction of approximately 15 500
compared to third quarter 2011, and approximately 5 300 compared to second
quarter 2012.
In connection with the implementation of our strategy announced in February
2011, we have announced and made a number of changes to our operations. In the
third quarter of 2012, we recognized restructuring charges and other associated
items of EUR 454 million related to our restructuring activities in Devices &
Services. By the end of the third quarter 2012, we had recorded cumulative
Devices & Services restructuring charges and other associated items of
approximately EUR 1.4 billion. In total, we expect cumulative Devices &
Services restructuring charges of approximately EUR 1.8 billion before the end
of 2013. By the end of the third quarter 2012, Devices & Services had
cumulative restructuring related cash outflows of approximately EUR 800
million. We expect Devices & Services restructuring related cash outflows to be
approximately EUR 400 million in fourth quarter 2012 and approximately EUR 400
million in 2013. Of the total expected charges relating to restructuring
activities of approximately EUR 1.8 billion, we expect Devices & Services
non-cash charges to be approximately EUR 200 million.
SMART DEVICES
The following table sets forth a summary of the results for our Smart Devices
business unit for the periods indicated, as well as the year-on-year and
sequential growth rates.
SMART DEVICES
RESULTS SUMMARY
Q3/2012 Q3/2011 YoY Q2/2012 QoQ
Change Change
Net sales (EUR millions)1 976 2 194 -56% 1 541 -37%
Smart Devices volume 6.3 16.8 -63% 10.2 -38%
(million units)
Smart Devices ASP (EUR) 155 131 18% 151 3%
Gross margin (%) -3.5% 20.7% 1.7%
Operating expenses 441 656 -33% 540 -18%
(EUR millions)2
Contribution margin (%)2 -48.9% -8.7% -32.9%
Note 1: Does not include IPR income. IPR income is recognized in Devices &
Services Other net sales.
Note 2: The year-on-year decrease in operating expenses resulted from the
proportionate allocation of operating expenses being affected by the relative
mix of sales and gross profit performance between Mobile Phones and Smart
Devices, resulting in lower relative allocations to Smart Devices in the first,
second and third quarters 2012.
Net Sales
On a year-on-year basis, the decline in our Smart Devices net sales in the
third quarter 2012 was primarily due to lower volumes partially offset by
higher ASPs. On a year-on-year basis, the volume decline was primarily due to
lower Symbian volumes partially offset by Lumia volumes. On a year-on-year
basis, ASPs benefitted from the higher proportion of Lumia net sales.
On a sequential basis, the decline in our Smart Devices net sales in the third
quarter 2012 was primarily due to lower Lumia and Symbian volumes. This was
partially offset by higher Smart Devices ASPs, primarily due to higher Symbian
ASPs as well as a positive impact related to deferred revenue on services sold
in combination with our devices.
Volume
During the third quarter 2012 we shipped 6.3 million Smart Devices units, of
which approximately 2.9 million were Lumia products.
The year-on-year decline in our Smart Devices volumes in the third quarter 2012
continued to be driven by the strong momentum of competing smartphone platforms
relative to our Smart Devices portfolio. Greater China, Europe, Asia-Pacific
and Middle East and Africa showed significant year-on-year decreases in
volumes, whereas North America and Latin America remained approximately at the
same level in the third quarter 2012.
On a sequential basis, the decline in our Smart Devices volumes in the third
quarter 2012 was primarily due to lower Symbian and Lumia volumes. All regions
showed a sequential decline in the third quarter 2012 except Middle East and
Africa which remained approximately at the same level.
Average Selling Price
The year-on-year increase in our Smart Devices ASP in the third quarter 2012
was primarily due to a positive mix shift towards sales of our Lumia products
which carry a higher ASP than our Symbian devices, as well as a positive impact
related to deferred revenue on services sold in combination with our devices.
Sequentially, the increase in our Smart Devices ASP in the third quarter 2012
was primarily due to higher Symbian ASPs as well as a positive impact related
to deferred revenue on services sold in combination with our devices. The ASP
of our Lumia products in the third quarter 2012 was EUR 160, compared to EUR
186 in the second quarter 2012. This decline was primarily due to a higher
proportion of sales of the lower priced Nokia Lumia offering as well as
increased erosion of our prices primarily due to our pricing actions.
Gross Margin
The significant year-on-year decline in our Smart Devices gross margin in the
third quarter 2012 was primarily due to the recognition of approximately EUR
120 million of allowances related to excess component inventory, future
purchase commitments and an inventory revaluation related to our current Lumia
products, as well as greater price erosion than cost erosion and higher fixed
costs per unit, because of lower sales volumes. From an operating system
perspective, the year-on-year decline in our Smart Devices gross margin in the
third quarter 2012 was primarily due to a lower Symbian gross margin. In
addition sales of Lumia products which were not available in the third quarter
2011 had a lower gross margin in the third quarter 2012 than Symbian devices in
the third quarter 2011.
On a sequential basis, the decline in our Smart Devices gross margin in the
third quarter 2012 was primarily due to higher fixed costs per unit, because of
lower sales volumes, as well as greater price erosion than cost erosion. The
EUR 120 million of allowances noted above also adversely affected our Smart
Devices gross margin in the third quarter 2012, but to a lesser extent than the
EUR 220 million of such allowances in the second quarter 2012. From an
operating system perspective, the sequential decline in our Smart Devices gross
margin in the third quarter was primarily due to a lower Lumia gross margin,
partially offset by a higher Symbian gross margin.
Increases or decreases to Smart Devices inventory related allowances may be
required in the future depending on several factors, including future consumer
demand, particularly related to our current Lumia products.
MOBILE PHONES
The following table sets forth a summary of the results for our Mobile Phones
business unit for the periods indicated, as well as the year-on-year and
sequential growth rates.
MOBILE PHONES
RESULTS SUMMARY
Q3/2012 Q3/2011 YoY Q2/2012 QoQ
Change Change
Net sales (EUR millions)1 2 366 2 915 -19% 2 291 3%
Mobile Phones 76.6 89.8 -15% 73.5 4%
volume (million units)
Mobile Phones ASP (EUR) 31 32 -3% 31 0%
Gross margin (%) 21.7% 23.6% 24.1%
Operating expenses 393 404 -3% 450 -13%
(EUR million)2
Contribution margin (%)2 4.9% 10.1% 4.3%
Note 1: Does not include IPR income. IPR income is recognized in Devices &
Services Other net sales.
Note 2: The year-on-year increase in operating expenses resulted from the
proportionate allocation of operating expenses being affected by the relative
mix of sales and gross profit performance between Mobile Phones and Smart
Devices, resulting in higher relative allocations to Mobile Phones in the
first, second and third quarters 2012.
Net Sales
On a year-on-year basis, the decline in our Mobile Phones net sales in the
third quarter 2012 was primarily due to lower volumes as well as lower ASPs. On
a sequential basis, the increase in our Mobile Phones net sales in the third
quarter 2012 was due to higher volumes.
Volume
During the third quarter 2012 we shipped 76.6 million Mobile Phones units, of
which 6.5 million were Asha full touch smartphones.
On a year-on-year basis, the decrease in our Mobile Phones volumes in the third
quarter 2012 was primarily due to the decline in volumes of our lower priced
devices that we sell to our customers for below EUR 30. Volumes of our higher
priced devices also declined, partially offset by volumes of our newly launched
Asha full touch smartphones.
On a sequential basis, the increase in our Mobile Phones volumes in the third
quarter 2012 was primarily due to volumes of our Asha full touch smartphones.
In addition, volumes of our devices that we sell to our customers for below EUR
30 increased sequentially, whereas volumes of our QWERTY devices declined
sequentially.
Average Selling Price
The year-on-year decline in our Mobile Phones ASP in the third quarter 2012 was
primarily due to an increased proportion of sales of lower priced devices.
On a sequential basis, our Mobile Phones ASP was approximately flat in the
third quarter 2012 as higher sales of our lower priced devices that we sell to
our customers for below EUR 30 were offset by higher sales of our Asha full
touch smartphones which carry higher ASPs.
Gross Margin
Both on a year-on-year as well as a sequential basis, the decline in our Mobile
Phones gross margin in the third quarter 2012 was primarily due to a greater
proportion of sales of lower gross margin devices.
LOCATION & COMMERCE
The following table sets forth a summary of the results for Location & Commerce
for the periods indicated, as well as the year-on-year and sequential growth
rates.
LOCATION & COMMERCE
RESULTS SUMMARY
Q3/2012 Q3/2011 YoY Q2/2012 QoQ
Change Change
Net sales (EUR millions) 265 282 -6% 283 -6%
External net sales 179 181 -1% 180 -1%
(EUR millions)
Internal net sales 86 101 -15% 103 -17%
(EUR millions)
Non-IFRS 80.4% 81.6% 77.4%
gross margin (%)
Non-IFRS operating 175 201 -13% 185 -5%
expenses (EUR millions)
Non-IFRS operating 14.0% 9.9% 14.5%
margin (%)
Net Sales
Starting in the third quarter 2012, we are disclosing additional financial
information for Location & Commerce: external and internal net sales.
External net sales represent sales of content licenses, platform licenses, and
applications to customers other than Nokia. Currently, Location & Commerce
external net sales are predominantly from the licensing of map content. Over
time, we expect a gradual but steady migration of external net sales towards
platform related revenue as our customers increasingly use the Nokia Location
Platform, which enables new and innovative location services and applications.
Internal net sales represent Location & Commerce sales in conjunction with
Nokia devices.
In the third quarter 2012, the year-on-year decline in external Location &
Commerce net sales was primarily due to lower sales to our personal navigation
device customers as industry volumes continued to decline, almost entirely
offset by higher sales of map content licenses to vehicle customers due to
higher consumer uptake of vehicle navigation systems. In the third quarter
2012, the sequential decline in external Location & Commerce net sales was
primarily due to lower map update sales, related to the timing of our update
campaigns, and seasonally lower vehicles sales, almost entirely offset by the
non-recurrence of a negative sales adjustment related to historical license
fees in the normal course of business for a particular customer.
In the third quarter 2012, the year-on-year and sequential declines in internal
Location & Commerce net sales were due to declines in sales to our Smart
Devices business unit.
Gross Margin
On a year-on-year basis, the decline in Location & Commerce non-IFRS gross
margin in the third quarter 2012 was primarily due to lower personal navigation
device sales which carry higher gross margins, lower internal sales which carry
higher gross margins, and higher vehicle sales which carry lower gross margins.
In addition, there was a shift of research and development operating expenses
to cost of sales as a result of the divestment of the media advertising
business and a lower allocation of production costs from Location & Commerce to
Devices & Services as the usage of certain shared services has declined.
On a sequential basis, the increase in Location & Commerce non-IFRS gross
margin in the third quarter 2012 was primarily due to the non-recurrence of a
negative sales adjustment related to historical license fees in the normal
course of business for a particular customer, as well as lower map update sales
which carry a lower gross margin.
Operating Expenses
Location & Commerce non-IFRS research and development expenses decreased 13%
year-on-year and 4% sequentially in the third quarter 2012 primarily due to
cost reductions as well as a shift in expenses from research and development to
costs of sales related to the divestment of the media advertising business.
Location & Commerce non-IFRS sales and marketing expenses decreased 21%
year-on-year and 4% sequentially in the third quarter 2012. On a year-on-year
basis, the decrease was primarily due to cost reduction actions. On a
sequential basis, the decrease was primarily due to lower marketing costs due
to timing of update campaigns.
Location & Commerce non-IFRS administrative and general expenses increased 6%
year-on-year and decreased 19% sequentially in the third quarter 2012. On a
year-on-year basis, the increase was primarily due to the higher use of
services provided by shared support functions. On a sequential basis, the
decrease was primarily due to lower use of services provided by shared support
functions.
Location & Commerce non-IFRS other income and expense for the third quarter
2012 was approximately zero, compared to expense of EUR 1 million in the third
quarter 2011 and income of EUR 7 million in the second quarter 2012.
Operating Margin
The higher year-on-year Location & Commerce non-IFRS operating margin in the
third quarter 2012 was primarily due to lower operating expenses, partially
offset by lower net sales and lower gross margin.
The approximately flat sequential Location & Commerce non-IFRS operating margin
in the third quarter 2012 was primarily due to higher gross margin and lower
operating expenses, partially offset by lower net sales and lower other income.
NOKIA SIEMENS NETWORKS
The following table sets forth a summary of the results for Nokia Siemens
Networks for the periods indicated, as well as the year-on-year and sequential
growth rates.
NOKIA SIEMENS NETWORKS
RESULTS SUMMARY
Q3/2012 Q3/2011 YoY Q2/2012 QoQ
Change Change
Net sales (EUR million) 3 501 3 413 3% 3 343 5%
Non-IFRS gross 32.2% 26.8% 26.6%
margin (%)
Non-IFRS operating 797 936 -15% 836 -5%
expenses (EUR million)
Non-IFRS operating 9.2% 0.2% 0.8%
margin (%)
Net Sales
The following table sets forth Nokia Siemens Networks net sales for the periods
indicated, as well as the year-on-year and sequential growth rates, by
geographic area.
NOKIA SIEMENS NETWORKS
NET SALES BY GEOGRAPHIC AREA
EUR millions Q3/2012 Q3/2011 YoY Q2/2012 QoQ
Change Change
Europe 918 1 074 -15% 990 -7%
Middle East & Africa 325 301 8% 304 7%
Greater China 313 302 4% 340 -8%
Asia-Pacific 1 266 978 29% 1 028 23%
North America 285 304 -6% 300 -5%
Latin America 394 454 -13% 381 3%
Total 3501 3413 3% 3343 5%
The year-on-year increase in Nokia Siemens Networks' net sales in the third
quarter 2012 was primarily due to higher sales of infrastructure equipment and
slightly higher sales of services, partially offset by a decline in sales of
business areas not consistent with Nokia Siemens Networks' strategic focus. On
a regional basis, the year-on-year growth was primarily due to higher net sales
in Asia Pacific, most notably in Japan which saw strong growth in sales of both
infrastructure equipment and services. This was partially offset by lower sales
in Europe of both infrastructure equipment and services, particularly
infrastructure equipment sales in Western Europe, primarily due to the
continuation of the weaker operator investment environment in that region and
lower services sales consistent with Nokia Siemens Networks' focused strategy.
The sequential increase in Nokia Siemens Networks' net sales in the third
quarter 2012 was driven by the higher sales of infrastructure equipment. Sales
of services were approximately flat compared to the second quarter 2012. On a
regional basis, the sequential growth was primarily due to higher net sales in
Asia Pacific, most notably in Japan which saw strong growth in sales of both
infrastructure equipment and services. This was partially offset by lower sales
in Europe of both services and infrastructure equipment, particularly
infrastructure equipment sales in Western Europe. In addition, sales of both
services and infrastructure equipment in China also declined primarily due to
ongoing technology transitions which have made the timing of operator spending
volatile.
At constant currency Nokia Siemens Networks' net sales would have decreased 3%
year-on-year and increased 1% sequentially.
Gross Margin
On both a year-on-year and sequential basis, the increase in Nokia Siemens
Networks' non-IFRS gross margin in the third quarter 2012 was due to an
unusually favorable product and regional mix towards higher gross margin
revenues, particularly in infrastructure equipment, driven mainly by Nokia
Siemens Networks priority markets including Japan and Korea. In addition, Nokia
Siemens Networks' non-IFRS gross margin in the third quarter 2012 was also
driven by structural cost savings in its production overheads as part of its
broader cost savings targets.
Operating Expenses
Nokia Siemens Networks' non-IFRS research and development expenses decreased
14% year-on-year and 5% sequentially in the third quarter 2012 primarily due to
improvements in overall research and development efficiency.
Year-on-year, Nokia Siemens Networks' non-IFRS sales and marketing expenses
decreased 15% in the third quarter 2012 primarily due to structural cost
savings, partially offset by higher sales. On a sequential basis, Nokia
Siemens Networks non-IFRS sales and marketing expenses decreased 6% in the
third quarter 2012 primarily due to structural cost savings, partially offset
by the higher net sales.
Nokia Siemens Networks' non-IFRS administrative and general expenses decreased
18% year-on-year in the third quarter 2012 primarily due to structural cost
savings, partially offset by higher net sales. On a sequential basis, Nokia
Siemens Networks non-IFRS administrative and general expenses increased 3% in
the third quarter 2012, primarily due to lower expense reallocation to other
function costs which more than offset structural cost savings.
Nokia Siemens Networks' non-IFRS other income and expense for the third quarter
2012 was an expense of EUR 8 million, compared to income of EUR 26 million in
the third quarter 2011 and expense of EUR 25 million in the second quarter
2012. On both a year-on-year and sequential basis, this was primarily due to
changes in the doubtful account allowances.
Operating Margin
The year-on-year and sequential increase in Nokia Siemens Networks non-IFRS
operating margin in the third quarter 2012 was primarily due to the higher
gross margin, lower operating expenses, and to a lesser extent, higher net
sales.
Strategy Update and Global Restructuring Program
NOKIA SIEMENS NETWORKS
RESTRUCTURING SUMMARY
- EUR Q3/2012 Cumulative up Q4/2012 2013 2014 Total
(mill (approxi to Q3/2012 (approximat (approxima (approxim (approxima
ion) mate) (approximate) e estimate) te ate te
estimate) estimate) estimate)
Restru 74 1 000 Not Not Not 1 200
cturin provided provided provided
g
relate
d
charge
s
Restru 180 450 250 400 100 1 200
cturin
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relate
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cash
outfl
ows
On November 23, 2011 Nokia Siemens Networks announced its strategy to focus on
mobile broadband and services and the launch of an extensive global
restructuring program.
At the end of the third quarter 2012, NSN had approximately 60 600 employees, a
reduction of approximately 14 300 compared to third quarter 2011, and
approximately 2 700 compared to second quarter 2012.
Nokia Siemens Networks continues to target to reduce its non-IFRS annualized
operating expenses and production overheads by EUR 1 billion by the end of
2013, compared to the end of 2011. While these savings are expected to come
largely from organizational streamlining, the company will also target areas
such as real estate, information technology, product and service procurement
costs, overall general and administrative expenses, and a significant reduction
of suppliers in order to further lower costs and improve quality.
In the third quarter of 2012, Nokia Siemens Networks recognized restructuring
charges and other associated items of EUR 74 million related to this
restructuring program, resulting in cumulative charges of approximately EUR 1.0
billion. In total, Nokia Siemens Networks expects cumulative restructuring
charges of approximately EUR 1.2 billion related to this restructuring program
before the end of 2012. By the end of the third quarter 2012, Nokia Siemens
Networks had cumulative restructuring related cash outflows of approximately
EUR 450 million related to this restructuring program. Nokia Siemens Networks
expects restructuring-related cash outflows to be approximately EUR 250 million
in the fourth quarter 2012, approximately EUR 400 million in 2013, and
approximately EUR 100 million in 2014 related to this restructuring program.
Cash preservation is a clear priority at Nokia Siemens Networks, and the
company intends to be self-funding in all aspects of its operations. Nokia
Siemens Networks' restructuring program, combined with the company's focus on
improving its financial performance, is designed to enable the company to end
2012 with higher net cash than at the end of 2011.
THIRD QUARTER 2012 OPERATING HIGHLIGHTS
NOKIA OPERATING HIGHLIGHTS
- Nokia was again selected as a component of the Dow Jones Sustainability World
Index (DJSI) and Dow Jones Sustainability Europe Index in the DJSI 2012 Review.
- Nokia was included by the Carbon Disclosure Project (CDP) in the Carbon
Disclosure Leadership Index and the Carbon Performance Leadership Index,
receiving recognition both for its disclosure of climate change information and
the action it is taking to reduce its emissions.
- Since the end of the quarter, Nokia completed its divestment of Vertu, the
global leader in luxury mobile phones, to EQT VI. The transaction was
originally announced on June 14, 2012. As part of the transaction,
approximately 1 000 employees have transferred with Vertu. Nokia retains a 10%
minority shareholding in Vertu.
DEVICES & SERVICES OPERATING HIGHLIGHTS
SMART DEVICES
- Nokia announced the Nokia Lumia 920 and the Nokia Lumia 820, the first
devices in Nokia's Windows Phone 8 range which are expected to ship in select
markets during the fourth quarter 2012. The Nokia Lumia 920 is the flagship
Windows Phone 8 smartphone, including the latest advances in Nokia PureView
imaging innovation as well as wireless charging. The Nokia Lumia 820 is a
stylish, mid-range smartphone that delivers high-end performance in a compact
package. Both the Lumia 820 and Lumia 920 come with Nokia City Lens, a new
augmented reality experience. - Nokia announced a range of wireless charging accessories and partnerships.
The Fatboy Recharge Pillow provides an alternative way to charge the Lumia 920
and Lumia 820 wirelessly, while HARMAN'S JBL brand introduced the JBL PowerUP,
a wireless charging docking station with high quality audio in retro styling.
Nokia has also agreed with Virgin Atlantic to put wireless charging stations in
the London Heathrow Clubhouse lounge and Coffee Bean & Tea Leaf to put charging
plates on tables in some of their cafes. - Nokia completed the acquisition of all technologies and intellectual property
from Scalado AB to strengthen Nokia's leading position in mobile imaging. As
part of the transaction, approximately 50 world-class imaging specialists
transferred to Nokia. - Nokia announced the launch of its free music streaming service Nokia Music in
the United States. Nokia Music is a free mobile experience exclusive to Nokia
Lumia handsets, providing consumers with a simple and delightful way to
discover and enjoy music. - Nokia announced the Nokia Purity Pro Wireless Stereo Headset by Monster. The
new headset, which comes in different colors, offers a wire-free connection to
your phone. Music transfer is by Bluetooth and the headset features one-touch
pairing with your smartphone using NFC.
MOBILE PHONES
- Nokia announced the Nokia Asha 308 and Asha 309, new additions to the Asha
Touch family. The dual SIM Nokia Asha 308 and single SIM Nokia Asha 309 give
consumers fast web access at low cost. Nokia also released a new version of
Nokia Xpress Browser, which enables up to 90% more efficient mobile browsing
and faster access to rich web applications compared to conventional browsers.
The Asha 308 and Asha 309 offer a fluid 'swipe' user interface and an open
environment for third-party application development, characteristics that have
earned the complete Asha Touch range full smartphone classification from global
market research companies and analysts such as GfK. - Nokia unveiled Nokia Life+, the latest evolution of its widely-used Nokia
Life service. Nokia Life+ is a Web application, which will provide millions of
people with valuable information on education, health and 'infotainment'
topics. Nokia Life+ will be supported by the Nokia Asha 308 and Nokia Asha 309
smartphones alongside a wide range of Nokia mobile phones.
LOCATION & COMMERCE OPERATING HIGHLIGHTS
Nokia's Location & Commerce business continued to strengthen both its portfolio
of location-based offerings with updates to its signature applications and its
customer base through new partnerships and licensing deals during the third
quarter:
- With its global footprint, high quality and broad array of features such as
geocoding, routing and traffic, we believe the Nokia Location Platform (NLP) is
the world's most advanced location platform, offering numerous opportunities
for third parties to build upon. During the third quarter, Amazon became an NLP
licensee for maps and geocoding.
- After announcing earlier this year that it is teaming up with Groupon to
bring local and national deals to Nokia customers, Location & Commerce released
a new version of Nokia Maps for the Lumia range that integrates Groupon Now!
Deals into the app.
- Location & Commerce brought Nokia City Lens to its Lumia range. Nokia City
Lens is an augmented reality application, which turns the phone's camera
viewfinder into a new way to see information about restaurants, shops, hotels
and more overlaid onto the surfaces of buildings for an intuitive way to find
hidden gems.
- Location & Commerce released an updated version of Nokia Transport, a mobile
application for the Lumia range providing underground, tram, suburban train and
bus directions for more than 500 cities in 46 countries in a convenient way.
- Location & Commerce released an update to the beta version of Nokia Pulse, an
application for smarter messaging, automatically tagging even simple messages
with location information to make them more useful and powerful.
- Nokia announced that Location & Commerce is providing NAVTEQ Traffic services
to Spectrum Medya, a leading Turkish broadcaster, for distribution via Radio
Data System (RDS).
- Location & Commerce continued to deliver automotive-grade maps content and
solutions to a number of major industry players. During the quarter, Nokia
announced that it is supplying NAVTEQ Maps to BMW for its next-generation
navigation system for the BMW 7-series ; to Hyundai, for its new head units; to
Mercedes, for its A-Class models; to Volkswagen, for systems for brands
throughout the Volkswagen group; to Pioneer, for its aftermarket navigation
systems; and to Peugeot, for its Peugeot 107 model, which represents the first
ever embedded navigation system in an A segment car at Peugeot.
- Nokia announced that Location & Commerce is supplying modified pan-European
reference data to the Ford Motor Company to enable its Emergency Assistance
technology to not only identify the location of the driver in need of help, but
also the appropriate language needed to alert local emergency service
operators.
- Nokia announced that its Location & Commerce business has collaborated with
Esri to advance the location intelligence capabilities of Esri's Business
Analyst and Community Analyst products by providing high-quality NAVTEQ Maps.
- Nokia announced that Location & Commerce is supplying its global Transit and
Pedestrian Content (TaP) for Garmin's new Urban Guidance function.
- In indoor mapping, Location & Commerce continued to steadily increase its
coverage of venues and buildings around the world and now covers 5 100 venues
and altogether 18 000 buildings in 40 countries.
NOKIA SIEMENS NETWORKS OPERATING HIGHLIGHTS
- Nokia Siemens Networks continued its mobile broadband deal momentum, adding
commercial LTE deals in the third quarter, including: refarming the GSM
frequency band and providing infrastructure and services for a 4G roll-out for
Optus in Australia; enabling Slovenia's first commercial 4G services for
Si.mobil; launching Russia's first TD-LTE 4G network for Mobile TeleSystems;
and modernizing the Radio Access Network and expanding HSPA+ and LTE networks
for Polkomtel in Poland.
- Nokia Siemens Networks also worked with Cisco and Harris Corporation to
support FirstNet's goal of a nationwide, multi-vendor public safety LTE
broadband network for first responder communications in the U.S., with the
successful completion of the initial phase of testing.
- In LTE technology developments, Nokia Siemens Networks announced the
expansion of its portfolio, to enable smooth 4G rollouts using the 'Digital
Dividend' in the Asia Pacific region, Latin America and other parts of the
world. Nokia Siemens Networks showcased LTE's low latency and high data
transmission rates with Telefonica Germany at the first ever pan-European
technology festival Campus Party in Berlin in September. In September, Nokia
Siemens Networks achieved a world record speed of 1.6 Gbps receiving and
sending data in simultaneous downlink and uplink connections at its lab in
Arlington Heights, Illinois, U.S.
- In Optical, Nokia Siemens Networks deployed a new overlay network across
Europe to address the sizeable growth in data traffic, delivering speeds of
100G and beyond, for fiber-based telecom service provider TeliaSonera
International Carrier. Nokia Siemens Networks' optical technology has been
accorded Approved Product List (APL) status by the U.S. government's Defense
Information Systems Agency (DISA), enabling the Department of Defense (DoD) to
purchase and deploy the company's optical technology.
- At the end of September, Nokia Siemens Networks set in motion a series of
Liquid Net and Customer Experience Management portfolio launches and updates to
be released during October 2012. These will culminate in a new approach to
delivering mobile broadband, charting a path for operators to be able to
profitably provide a gigabyte of personalized data per day for every user by
2020.
- Since the end of the third quarter, Nokia Siemens Networks has completed the
divestment of the assets of the non-core IPTV business to Belgacom and
Accenture.
FORWARD-LOOKING STATEMENTS
It should be noted that certain statements herein that are not historical facts
are forward-looking statements, including, without limitation, those regarding:
A) the expected plans and benefits of our partnership with Microsoft to bring
together complementary assets and expertise to form a global mobile ecosystem
for smartphones; B) the timing and expected benefits of our new strategies,
including expected operational and financial benefits and targets as well as
changes in leadership and operational structure; C) the timing of the
deliveries of our products and services; D) our ability to innovate, develop,
execute and commercialize new technologies, products and services; E)
expectations regarding market developments and structural changes; F)
expectations and targets regarding our industry volumes, market share, prices,
net sales and margins of our products and services; G) expectations and targets
regarding our operational priorities and results of operations; H) expectations
and targets regarding collaboration and partnering arrangements; I) the outcome
of pending and threatened litigation; J) expectations regarding the successful
completion of restructurings, investments, acquisitions and divestments on a
timely basis and our ability to achieve the financial and operational targets
set in connection with any such restructurings, investments, acquisitions and
divestments; and K) statements preceded by 'believe,' 'expect,' 'anticipate,'
'foresee,' 'target,' 'estimate,' 'designed,' 'aim', 'plans,' 'intends,' 'will'
or similar expressions. These statements are based on management's best
assumptions and beliefs in light of the information currently available to it.
Because they involve risks and uncertainties, actual results may differ
materially from the results that we currently expect. Factors that could cause
these differences include, but are not limited to: 1) our success in the
smartphone market, including our ability to introduce and bring to market
quantities of attractive, competitively priced Nokia products that operate on
the Windows Phone operating system that are positively differentiated from our
competitors' products, both outside and within the Windows Phone ecosystem; 2)
our ability to make Nokia products that operate on the Windows Phone operating
system a competitive choice for consumers, and together with Microsoft, our
success in encouraging and supporting a competitive and profitable global
ecosystem for Windows Phone products that achieves sufficient scale, value and
attractiveness to all market participants; 3) reduced demand for, and net sales
of, Nokia products that operate on the Windows Phone 7 operating system in
anticipation and availability of Nokia products with the new Windows Phone 8
operating system; 4) the difficulties we experience in having a competitive
offering of Symbian devices and maintaining the economic viability of the
Symbian smartphone platform during the transition to Windows Phone as our
primary smartphone platform; 5) our ability to effectively and timely implement
planned changes to our operational structure, including the planned
restructuring measures, and to successfully complete the planned investments,
acquisitions and divestments in order to improve our operating model and
achieve targeted efficiencies and reductions in operating expenses as well as
our ability to accurately estimate the related restructuring charges and
restructuring related cash outflows; 6) our future sales performance, among
other factors, may require us to recognize allowances related to excess
component inventory, future purchase commitments and inventory write-offs in
our Devices & Services business; 7) our ability to realize a return on our
investment in next generation devices, platforms and user experiences; 8) our
ability to produce attractive and competitive devices in our Mobile Phones
business unit including feature phones and devices with more smartphone-like
features such as full touch devices, in a timely and cost efficient manner with
differentiated hardware, software, localized services and applications; 9) the
intensity of competition in the various markets where we do business and our
ability to maintain or improve our market position or respond successfully to
changes in the competitive environment; 10) our ability to retain, motivate,
develop and recruit appropriately skilled employees; 11) the success of our
Location & Commerce strategy, including our ability to establish a successful
location-based platform, provide support for our Devices & Services business
and create new sources of revenue from our location-based services and commerce
assets; 12) our actual performance in the short-term and long-term could be
materially different from our forecasts, which could impact future estimates of
recoverable value of our reporting units and may result in impairment charges;
13) our success in collaboration and partnering arrangements with third
parties, including Microsoft; 14) our ability to increase our speed of
innovation, product development and execution to bring new innovative and
competitive mobile products and location-based or other services to the market
in a timely manner; 15) our dependence on the development of the mobile and
communications industry, including location-based and other services
industries, in numerous diverse markets, as well as on general economic
conditions globally and regionally; 16) our ability to protect numerous
patented standardized or proprietary technologies from third-party infringement
or actions to invalidate the intellectual property rights of these
technologies; 17) our ability to maintain and leverage our traditional
strengths in the mobile product market if we are unable to retain the loyalty
of our mobile operator and distributor customers and consumers as a result of
the implementation of our strategies or other factors; 18) the success,
financial condition and performance of our suppliers, collaboration partners
and customers; 19) our ability to manage efficiently our manufacturing and
logistics, as well as to ensure the quality, safety, security and timely
delivery of our products and services; 20) our ability to source sufficient
amounts of fully functional quality components, sub-assemblies, software and
services on a timely basis without interruption and on favorable terms; 21) our
ability to manage our inventory and timely adapt our supply to meet changing
demands for our products; 22) any actual or even alleged defects or other
quality, safety and security issues in our products; 23) the impact of a
cybersecurity breach or other factors leading to any actual or alleged loss,
improper disclosure or leakage of any personal or consumer data collected by us
or our partners or subcontractors, made available to us or stored in or through
our products; 24) our ability to successfully manage the pricing of our
products and costs related to our products and operations; 25) exchange rate
fluctuations, including, in particular, fluctuations between the euro, which is
our reporting currency, and the US dollar, the Japanese yen and the Chinese
yuan, as well as certain other currencies; 26) our ability to protect the
technologies, which we or others develop or that we license, from claims that
we have infringed third parties' intellectual property rights, as well as our
unrestricted use on commercially acceptable terms of certain technologies in
our products and services; 27) the impact of economic, political, regulatory or
other developments on our sales, manufacturing facilities and assets located in
emerging market countries; 28) the impact of changes in government policies,
trade policies, laws or regulations where our assets are located and where we
do business; 29) the potential complex tax issues and obligations we may incur
to pay additional taxes in the various jurisdictions in which we do business
and our actual or anticipated performance, among other factors, could result in
allowances related to deferred tax assets; 30) any disruption to information
technology systems and networks that our operations rely on; 31) unfavorable
outcome of litigations; 32) allegations of possible health risks from
electromagnetic fields generated by base stations and mobile products and
lawsuits related to them, regardless of merit; 33) Nokia Siemens Networks
ability to implement its new strategy and restructuring plan effectively and in
a timely manner to improve its overall competitiveness and profitability; 34)
Nokia Siemens Networks' success in the telecommunications infrastructure
services market and Nokia Siemens Networks' ability to effectively and
profitably adapt its business and operations in a timely manner to the
increasingly diverse service needs of its customers; 35) Nokia Siemens
Networks' ability to maintain or improve its market position or respond
successfully to changes in the competitive environment; 36) Nokia Siemens
Networks' liquidity and its ability to meet its working capital requirements;
37) Nokia Siemens Networks' ability to timely introduce new competitive
products, services, upgrades and technologies; 38) Nokia Siemens Networks'
ability to execute successfully its strategy for the acquired Motorola
Solutions wireless network infrastructure assets; 39) developments under large,
multi-year contracts or in relation to major customers in the networks
infrastructure and related services business; 40) the management of our
customer financing exposure, particularly in the networks infrastructure and
related services business; 41) whether ongoing or any additional governmental
investigations into alleged violations of law by some former employees of
Siemens may involve and affect the carrier-related assets and employees
transferred by Siemens to Nokia Siemens Networks; and 42) any impairment of
Nokia Siemens Networks customer relationships resulting from ongoing or any
additional governmental investigations involving the Siemens carrier-related
operations transferred to Nokia Siemens Networks, as well as the risk factors
specified on pages 13-47 of Nokia's annual report on Form 20-F for the year
ended December 31, 2011 under Item 3D. 'Risk Factors.' Other unknown or
unpredictable factors or underlying assumptions subsequently proving to be
incorrect could cause actual results to differ materially from those in the
forward-looking statements. Nokia does not undertake any obligation to publicly
update or revise forward-looking statements, whether as a result of new
information, future events or otherwise, except to the extent legally required.
Nokia, Helsinki - October 18, 2012
Media and Investor Contacts:
Corporate Communications, tel. +358 7180 34900 email: [email protected]
Investor Relations Europe, tel. +358 7180 34927
Investor Relations US, tel. +1 914 368 0555
- Nokia plans to publish its fourth quarter and annual 2012 report on January
24, 2013. - Nokia plans to publish the 'Nokia in 2012' annual report, which includes the
review by the Board of Directors and the audited annual accounts, in week 13 of - Nokia's Annual General Meeting is scheduled to be held on May 7, 2013.
www.nokia.com
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Company: Nokia
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ISIN: FI0009000681
Category Code: QRT
LSE Ticker: 0HAF
Sequence Number: 1228
Time of Receipt: Oct 18, 2012 12:00:14
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