No turnaround in sight as Nokia loses another $1bn

It may be the height of summer in Finland, but the view from Nokia (s NOK) chief Stephen Elop’s office window must look pretty dismal right now. Things just keep getting worse for the beleaguered handset maker, which has just announced that it lost $1 billion over the last three months.
Announcing its financials for the second quarter of 2012 on Thursday, Nokia said it lost €826 million ($1 billion) on sales of more than $9 billion.
Coming after a first quarter that had the industry recoiling in terror, the company’s plan to get its struggling business back on track looks as distant as it ever has.
Here are the headline figures from the results:

    Net sales were €7.5 billion ($9.2 billion), up slightly on the previous quarter
    But actual mobile sales were down five percent on the same time last year
    The mobile devices unit was responsible for €474 million in losses, more than half of the total

There were few surprises in the results, which analysts had estimated pretty accurately. The company’s total volume of Windows Phone handsets reached 4 million — as predicted — and most other figures were in line with expectations. That was partly due to an update issued by the company in June, but even that did not manage to stop shares sliding. They are now at their lowest point for 20 years.
The grim reality is that the rot seems to be pretty much everywhere, with all of the major business units (mobile, location and Nokia Siemens Networks) losing cash and mobile sales or revenue falling in every region where the business operates. And there are costs all over the business too: restructuring and job losses are cutting deep, and even an asset like Navteq was responsible for €126 million in writedowns and depreciation.
The only real bonus — if you can call anything that relates to a $1 billion deficit a bonus — is that the company is not losing quite as much money as it did in Q1. But then compare it to this time last year when losses were $692 million, and you realize that’s little comfort.
From the leadership, the story was the same as it’s been for a while: it’s a difficult time, this ship will take time to turn around, the market’s challenging but stick with us.
Observe Elop, from the announcement:

“Nokia is taking action to manage through this transition period. While Q2 was a difficult quarter, Nokia employees are demonstrating their determination to strengthen our competitiveness, improve our operating model and carefully manage our financial resources […] While Q3 will remain difficult, it is a critical priority to return our Devices & Services business to positive operating cash flow as quickly as possible.”

And here’s what he said last quarter:

“We are navigating through a significant company transition in an industry environment that continues to evolve and shift quickly. Over the last year we have made progress on our new strategy, but we have faced greater than expected competitive challenges.
“[…] We have a clear sense of urgency to move our strategy forward even faster …We are confident in our strategy and focused on responding urgently in the short term and creating value for our shareholders in the long term.”

Elop’s clear on one thing: it’s not going to get better any time soon, and the expectation for Q3 is not good. The question, surely, is whether he can maintain leadership and convince the company it’s on the right path while all the evidence points in the other direction.