Nearly two many years ago, Stephen A. Elop, Nokia's new chief executive, spoke of flaming ocean platforms and shark-infested waters to describe the difficulties he inherited because the enterprise teetered to the brink of irrelevance.
Mr. Elop painted the bleak outlook as he prescribed a radical remedy to the Finnish cell phone pioneer: The rejection in the company's personal Symbian smartphone operating process for any shotgun wedding to Microsoft, itself stumbling badly with smartphone application. Immediately after that, revenue slumped sharply, losses mounted and massive layoffs followed.
On Thursday, he delivered sudden excellent news: a profit. Income of its new smartphone line, the Lumia, powered by Microsoft's Windows Mobile phone operating process, soared a lot more than 50 % while in the fourth quarter of final year, in accordance with preliminary economic data.
In what was observed as being a make-or-break quarter, Mr. Elop stated Nokia would break even or turn a two % profit as an alternative to report a reduction as massive as ten %, as analysts anticipated.
Nokia will report its earnings on Jan. 24.
Wall Street reacted for the announcement by sending Nokia's American depositary receipts up 18.67 %, or 70 cents, to $4.45.
"While we unquestionably seasoned some hard difficulties while in the initial half of 2012, we're managing via these troubles," Mr. Elop stated inside a conference phone with journalists.
What Nokia has completed underneath Mr. Elop is usually to make a line of more and more competitive smartphones which can be starting up to draw favorable comparisons with these from Samsung and Apple, the 2 businesses most liable for knocking Nokia from its lofty perch.
"The Lumia smartphones are night-and-day distinctive from Nokia's old Symbian handsets," stated Francisco Jeronimo, an analyst with all the Worldwide Information Corporation in London. "I assume what we're commencing to check out now is what are going to be a steady turnaround in Nokia's fortunes."
The corporation, which dominated the cellphone small business until eventually Apple introduced its iPhone in 2007, nonetheless includes a extended solution to visit accomplish its former stature. Inside the third quarter, Nokia held on to a four % share from the international smartphone market place, and was ranked a distant No. ten inside the sector, in line with Approach Analytics, a investigation company.
Samsung and Apple, the No. one and No. two smartphone makers, with each other had 50 % from the international smartphone industry, and their income have been expanding. Though its rivals rose, Nokia has produced just about five billion euros ($6.five billion) in losses below Mr. Elop, and eradicated a third of its get the job done force.
The important thing to its turnaround was the introduction in October with the top-of-the-line Lumia 920 and 820, which employed the new Windows Mobile phone eight operating program. Considering the fact that then, Nokia has spent heavily on promoting in Britain and Europe to encourage the designs. The enterprise won't disclose simply how much it had spent on its campaign, but its tv adverts have been ubiquitous more than the holidays, explained Neil Mawston, an analyst at Method Analytics in London.
The heavy promotion, which was aided by Microsoft's personal promoting, has aided the firm recapture a few of its lost glory, Mr. Mawston mentioned.
But he warned that "Nokia even now lacks the real killer mobile phone that may allow it to compete together with the iPhone five or Samsung Galaxy S III." He anticipated Nokia's share in the worldwide smartphone market place to rise to six % from the finish from the year.
The company's economic place is very likely to revive a lot more speedily due to the rigid cost-cutting imposed by Mr. Elop, who ran Microsoft's company software program division well before joining Nokia in late 2010.
Because then, Nokia has shut factories across Europe. Final month, the enterprise sold its 540,000-square-foot glass-and-wood headquarters during the Helsinki suburb of Espoo to Finnish investors, and leased it back. The maneuver netted Nokia 170 million euros.
Apart from a additional competitive array of phones, Nokia has discarded its market-leader mentality. Workers are now routinely traveling in economic system class and sharing rides to airports. Employees no longer use pricey phone conference calling but talk in group teleconferences employing much less highly-priced Online calling companies.
"The corporation is actually a great deal smaller sized now but folks are functioning improved collectively," mentioned Susan Sheehan, a Nokia spokeswoman. "Everyone continues to be pitching in."
Even at Nokia Siemens, the company's long-suffering network tools venture, the potential is searching brighter than it had been two many years ago. On Thursday, Nokia stated the unit, which contributes about 40 % of complete income, would report an operating profit for your quarter, its third consecutive quarterly profit.
Nokia, in its announcement to investors, even revised the operating profit margin forecast on the venture to 13 to 15 % of revenue, up from a variety of four to twelve %.
Wanting ahead, Nokia mentioned it anticipated to return to an operating reduction of two % of product sales on account of the first-quarter postholiday obtaining lull and fierce competitors. However the outcomes to the coming 3 months could differ broadly.
Pete Cunningham, an analyst at Canalys, a exploration company in Studying, England, mentioned that Nokia even now faced difficulties. "2013 could nonetheless turn out to get an additional pretty challenging year for Nokia. It truly is way as well premature to state that the business has created a turnaround."
Mr. Cunningham explained he made use of the Lumia 920, Nokia's newest smartphone, throughout the Christmas holidays and liked it.
"But the a lot more I applied the cell phone, the extra obvious it became to me that there are actually huge gaps concerning Lumia and its rivals regarding the performance and usability of its apps," Mr. Cunningham mentioned.
"I nevertheless feel there's lots of get the job done to get completed on Lumia."
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