Finnish maker’s shares plunge 5.5% as Korean rival boasts record Q4 profits
The divide between Samsung and Nokia has become more marked, latest trading updates show, with the Korean manufacturer returning record quarterly profits while its Finnish rival has been forced into ditching its dividend payouts.
Last night Nokia shares closed 5.5 per cent down on news that it was abolishing dividends which last year cost the firm €750 million, around a sixth of its €4.4 billion cash reserves.
Ironically the company had reported a profit for the final quarter of 2012 as purchases of its flagship Lumia smartphones improved, though overall sales fell by a fifth to €8.041 billion, falling short of estimates.
Nokia has struggled to retain its position in the phone market and, up until the latest Q4 results, had reported six successive quarters of losses that reached €1 billion at times.
It has led to criticism of the company’s CEO Stephen Elop and his strategy of ditching Nokia’s own Symbian software in favour of Microsoft’s Windows Phone operating system two years ago. Though it’s still early days a question mark hangs over whether the gambit has paid off.
As previously announced, Nokia sold 4.4 million Lumias in the quarter – less than a tenth of the 47.8 million iPhones Apple sold.
After 14 years at the top it has also been overtaken by Samsung as the world’s biggest mobile phone maker in terms of handsets sold.
Yesterday, as Nokia’s shares were plunging, Samsung itself was revealing how its operating profit had increased 89 per cent from a year ago to 8.84 trillion Korean won, yielding a record quarterly $8.3 billion (£5.3 billion).
It also announced that it would be keeping 2013 investment plans at the previous year’s level, defying expectations that it may reduce spending amid weaker demand for computer chips.
* Apple’s shares slid even further than Nokia at close last night [24th January 2013], dropping 12 per cent and wiping more than $50 billion (£32 billion) off the company’s value.
The decline came amid analysts’ warnings of a slowdown in demand for the iPhone, aligned with Apple’s perceived failure to keep step with rival Samsung in the screen-size wars where customers are shifting to larger, five inch displays.