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The number of smartphones being used worldwide topped one billion in the third quarter, according to the U.S. Strategy Analytics consultancy firm. That number could double again in less than three years. Investors in Nokia, though, may have forgotten that they are engaged in a growth industry. On Thursday, the Finnish device maker unveiled another substantial operating loss – €580-million ($747-million) on a reported basis in the three months to September – while its sales fell by one-fifth from year-ago levels. Again, too, there was an air of nervous water-treading: the group's new Windows-based Lumia phones start shipping next month, so, come 2013, the market may finally be able to assess whether Nokia/Microsoft can establish a viable sector position.

True, third-quarter numbers overall were slightly better than expected. Revenue was 4 per cent higher than consensus estimates; the underlying (non-IFRS) loss per share, at 7 cents, ahead of an expected 11 cents deficit. But this was largely due to an improved contribution from Nokia Siemens Networks, where sales rose 3 per cent year-on-year and underlying operating margins leapt to 9 per cent, compared with 1 per cent in the previous quarter. Investors may wonder whether this can be sustained given the competitive environment, although Nokia is guiding to an 8-per-cent margin at NSN in the fourth quarter.

By contrast, the core devices and services side remained very weak, with the product transition continuing to weigh on results and the reported operating loss rising to €680-million. Only 6.3 million smart devices were sold in the quarter, down from 10.2 million in the previous three months. In China, devices sales overall fell 80 per cent year-on-year. Nokia's net cash pile also slid 15 per cent to €3.6-billion. Nokia shares are now very cheap but, until product progress is evident, unlikely to revive.

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Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 27/03/24 6:40pm EDT.

SymbolName% changeLast
MSFT-Q
Microsoft Corp
-0.05%421.43
NOK-N
Nokia Corp ADR
+1.69%3.6

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