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 complications he inherited since the enterprise teetered within the brink of irrelevance.
Mr. Elop painted the bleak outlook as he prescribed a radical remedy for that Finnish cell phone pioneer: The rejection from the company's personal Symbian smartphone operating process for the shotgun wedding to Microsoft, itself stumbling badly with smartphone application. Just after that, product sales slumped sharply, losses mounted and enormous layoffs followed.
On Thursday, he delivered sudden fantastic news: a profit. Product sales of its new smartphone line, the Lumia, powered by Microsoft's Windows Cellphone operating technique, soared in excess of 50 % while in the fourth quarter of final year, as outlined by preliminary fiscal information and facts.
In what was witnessed being a make-or-break quarter, Mr. Elop mentioned Nokia would break even or turn a two % profit in lieu of report a reduction as huge as ten %, as analysts anticipated.
Nokia will report its earnings on Jan. 24.
Wall Street reacted on the announcement by sending Nokia's American depositary receipts up 18.67 %, or 70 cents, to $4.45.
"While we absolutely knowledgeable some hard issues from the initial half of 2012, we're managing as a result of these problems," Mr. Elop mentioned within a conference phone with journalists.
What Nokia has completed below Mr. Elop should be to deliver a line of more and more competitive smartphones which are commencing to draw favorable comparisons with people from Samsung and Apple, the 2 providers most liable for knocking Nokia from its lofty perch.
"The Lumia smartphones are night-and-day diverse from Nokia's old Symbian handsets," mentioned Francisco Jeronimo, an analyst using the Global Information Corporation in London. "I assume what we're commencing to find out now is what will probably be a steady turnaround in Nokia's fortunes."
The corporation, which dominated the cellphone organization till Apple introduced its iPhone in 2007, nevertheless includes a extended approach to head to realize its former stature. Inside the third quarter, Nokia held on to a four % share from the international smartphone marketplace, and was ranked a distant No. ten during the sector, based on Tactic Analytics, a study company.
Samsung and Apple, the No. one and No. two smartphone makers, with each other had 50 % in the international smartphone industry, and their income had been expanding. Even though its rivals rose, Nokia has produced almost 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 in the top-of-the-line Lumia 920 and 820, which utilised the new Windows Cell phone eight operating program. Considering that then, Nokia has spent heavily on promoting in Britain and Europe to encourage the designs. The corporation won't disclose just how much it had spent on its campaign, but its tv adverts had been ubiquitous in excess of the holidays, stated Neil Mawston, an analyst at Approach Analytics in London.
The heavy promotion, which was aided by Microsoft's very own promoting, has assisted the organization recapture several of its lost glory, Mr. Mawston explained.
But he warned that "Nokia nevertheless lacks the real killer mobile phone that may allow it to compete using the iPhone five or Samsung Galaxy S III." He anticipated Nokia's share from the international smartphone market place to rise to six % from the finish in the year.
The company's economic place is very likely to revive much more speedily because of the rigid cost-cutting imposed by Mr. Elop, who ran Microsoft's enterprise program division ahead of joining Nokia in late 2010.
Due to the fact then, Nokia has shut factories across Europe. Final month, the business sold its 540,000-square-foot glass-and-wood headquarters within the Helsinki suburb of Espoo to Finnish investors, and leased it back. The maneuver netted Nokia 170 million euros.
Aside 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 working with much less highly-priced Online calling solutions.
"The firm is often a great deal smaller sized now but individuals are functioning much better collectively," explained Susan Sheehan, a Nokia spokeswoman. "Everyone is pitching in."
Even at Nokia Siemens, the company's long-suffering network gear venture, the long term is hunting brighter than it had been two many years ago. On Thursday, Nokia mentioned the unit, which contributes about 40 % of complete income, would report an operating profit to the 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 product sales, up from a selection of four to twelve %.
Wanting ahead, Nokia mentioned it anticipated to return to an operating reduction of two % of revenue as a consequence of the first-quarter postholiday getting lull and fierce competitors. However the benefits to the coming 3 months could differ extensively.
Pete Cunningham, an analyst at Canalys, a study company in Reading through, England, explained that Nokia nonetheless faced problems. "2013 could even now turn out to get a different quite hard year for Nokia. It's way also premature to state that the business has produced a turnaround."
Mr. Cunningham mentioned he utilised the Lumia 920, Nokia's newest smartphone, in the course of the Christmas holidays and liked it.
"But the far more I utilized the cellphone, the extra obvious it became to me that you will discover huge gaps concerning Lumia and its rivals when it comes to the performance and usability of its apps," Mr. Cunningham stated.
"I nonetheless assume there may be plenty of perform to get completed on Lumia."
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