Three very contrasting sets of financial figures have been released over the last few days, with Apple turning in record sales and earnings, Nokia feeling the heat and Yahoo continuing its slow decline.
First the figures. Net sales at Nokia came in at EUR9.27bn, down around 7%. Profit was also down. Despite a cash injection from Apple of EUR430m following a patent dispute, the company still recorded an operating loss of EUR487m. Sales of its smartphones dropped 34% year-on-year and overall mobile sales fell 20%.
Nokia CEO Stephen Elop
Just 16.7 million smartphones were shipped during the quarter, down from 25 million a year ago. Mobile phone sales dropped from 85.8 million to 71.8 million. Overall mobile device (smartphones and feature phones) sales dropped below 100 million, to 88.5 in total. Quite a fall a company that was once the undisputed king of the mobile space.
Is it surprising to see Nokia struggling? Not really, no. The company has undergone a lot of changes since former Microsoft man Stephen Elop took charge (although it was of course already enduring a tough time when he arrived). The biggest change he made has been the switch to Windows Phone, at the expense of Nokia’s own mobile operating system Symbian.
But after the company announced the first Windows Phone wouldn’t be out before the end of the year it was effectively in limbo. Why invest in a Nokia product now? If people want a smartphone they are not going to wait around for the first Nokia/Windows phone, they are going to head on over to Apple or HTC.
As Francisco Jeronimo, research manager for European mobile devices, IDC, is quoted in the Guardian as saying: "I think it will take at least two or three quarters after the launch of Nokia Windows Phone devices before they get positive results. That takes you to March of next year. But consumers are moving to smartphones, and it will be very hard for Nokia to get them if they have just signed up to two-year contracts using an Android, iPhone or another smartphone."
So even if the Nokia/Windows tie-up does produce a must-have smartphone there is a real danger that Nokia could be so far behind the competition that it will never catch up. Things will certainly get worse before they get better.
Yahoo (another company that has a big tie-up with Microsoft, hmmm…) is another grand old institution that has fallen on hard times recently. The former search giant, now pitching itself as more of a web portal/one-stop shop for all your online needs, has seen its share of the search market obliterated by Google.
Its latest figures were once again below analyst expectations. Revenue plunged 23% to $1.23bn. The company put this down to, "the required change in revenue presentation related to the Search Agreement and the associated revenue share with Microsoft."
Its stock fell 8% on the news and is down around 12% in total this year, heaping even more pressure on CEO Carol Bartz. The company’s stronghold of display ad revenues is also under threat: a recent report from eMarketer claimed that Facebook will overtake it in the US market this year with revenue of $2.2bn, compared to Yahoo’s $1.62bn. In 2012 eMarketer believes Facebook will stretch that advantage to $2.87bn, with Yahoo back on $1.85bn and Google close behind on $1.83bn.
There was a glimmer of hope for Yahoo though; net earnings were up 11% to $237m.
We can contrast these figures with that of Apple, currently the juggernaut of the tech space. The company witnessed a mammoth 82% hike in revenue to a record $28.6bn while profit was also at a record high – up from $3.2bn a year ago to $7.3bn this time.
Apple boss Steve Jobs
The figures were driven by surging iPad (up 183% to 9.2 million) and iPhone (20.3 million sold; up 142% over last year) sales. The iPhone figures were particularly impressive given that there was no new model released during that time. The increased iPad sales were put down to the rush of interest following the launch of the iPad 2 earlier this year.
It’s difficult to see the Apple juggernaut being stopped any time soon. There are rumours of an updated iPhone due later this year and the introduction of a cheaper iPhone, aiming for the lower end of the smartphone market. Apple’s market capitalisation now stands at nearly $350bn, making it by far the biggest technology company in the world.
As Peter Oppenheimer, Apple’s chief financial officer, put it during a conference call with analysts to discuss the stellar figures: "We are incredibly confident about our business, our product pipeline and what we are doing."
