Three leading technology giants in the feature phone, internet and telecommunication equipment markets of the Information and Communications Technology (ICT) sector, Nokia, Microsoft and Ericsson have taken a combined loss of $2.533 billion in the second quarter as revenue drops in their various markets affected their profitability due to the uncertainty of the global economy.
Nokia, Microsoft and Ericsson lost $1.87 billion, $492 million and $171 million respectively. Nokia for the second quarter of this year lost €1.53 billion ($1.87 billion), compared to a loss of EUR492 million a year ago. Revenues also fell by 19 per cent year on year to €7.54 billion ($9.3 billion), although they were up very slightly, compared to the first three months of the year.
Stephen Elop, Nokia’s CEO, said while the second quater (Q2) was a difficult one, Nokia employees were demonstrating their determination to strengthen competitiveness, improve operating model and carefully manage financial resources. “While Q3 will remain difficult, it is a critical priority to return our devices and services business to positive operating cash flow as quickly as possible.” he added.
Nokia also warned that it might have to make non-cash write downs of the goodwill attached to its businesses in the future. The goodwill totalled EUR4.99 billion at the end of June. In the smart phone division, sales fell by a third to EUR1.54 billion, although the average selling price per handset actually rose to EUR151.
Microsoft reported a net loss of $492 million, or 6 cents per share, for its fiscal fourth quarter, compared to a profit of $5.87 billion, or 69 cents per share, in the year-ago quarter. The loss was expected after Microsoft said earlier this month that it would take a $6.2 billion write-down for the value of its online unit after an ill-fated acquisition of a digital advertising agency five years ago. Microsoft has not suffered a quarterly loss since going public in 1986.
Ericsson saw profits drop by 63 per cent to SEK1.2 billion ($171 million), which it put down to lower profitability in its networks division and increased losses at ST-Ericsson. There was also a SEK300 million-cost associated with a resolved supplier lawsuit from its former Sony Ericsson subsidiary. Revenues were flat at $7.88billon.
“In the quarter, demand for Global Services and Support Solutions was strong, while Networks sales decreased YoY mainly due to the expected decline in CDMA equipment sales as well as lower business activity in China, including weaker sales of GSM and lower 3G sales in Russia,” says Hans Vestberg, President and CEO of Ericsson.