Nokia reports heavy switch to loss in the second quarter

The world's top mobile phone maker Nokia reported a sharp quarterly switch into loss on Thursday, only the second quarterly loss since the company become world leader in 1998. After the news, Nokia's share price rose by 4.9 percent to 4.28 euros on a Helsinki Stock Exchange down 0.4 percent. The Finnish company posted a net loss of 368 million euros ($520.5 million) compared to the 227-million-euro net profit it posted in the second quarter of 2010. The outcome was far worse than expectations of analysts polled by Dow Jones Newswires who had estimated a loss of 104 million euros. Sales slipped 7.3 percent to 9.3 billion euros from 10.0 billion euros for the same period last year. "The challenges we are facing during our strategic transformation manifested in a greater than expected way in Q2 (second quarter) 2011," chief executive Stephen Elop said in a statement. But he said that massive re-structuring had already begun to have a "positive impact on the underlying health" of the company. The upheaval follows a radical shake-up launched by Elop in February, when he announced that Nokia, facing stark competition in the vital smartphone market from iPhone, Blackberry and Google, would abandon its own mobile operating system and start using one designed by Microsoft instead. Nokia said that positive factors in the third quarter, such as the ramp-up of dual-SIM mobiles, an aggressive marketing campaign as well as a generally better global economy would help sales, but noted that its non-IFRS operating margin for its mobile unit would still be around "breakeven." "We are making better-than expected progress toward our strategic goals," said Elop. Thursday's report comes after Nokia warned in May that its second-quarter would be even worse than previously anticipated, adding that it would no longer give a full-year forecast and only provide short-term quarterly guidance "when circumstances allow it to do so."