Earnings Season – Round 2

Google, Nokia & Microsoft announced their second quarter earnings yesterday. Apple is scheduled for next Thursday (July 24th) & the all important Facebook call happening two days later (July 26th).

First, Nokia,

Nokia revealed a total operating loss of €826 million (around $1 billion). The loss was offset by large licensing royalties and a regular quarterly cheque from Microsoft, resulting in a net cash rise of €102 million (around $125 million). Lumia sales reached four million — double last quarter’s two million but only shipped a total of 600,000 units in North America in Q2, meaning Its Lumia 900 launch had little impact on overall sales.

The downfall continues, albeit slowly. The 4 million sell through number for the Lumia range is quite a surprise but their quest for a US marketshare/mindshare still continues.The Average Selling Price (ASP) of smartphones was better last quarter but with Windows Phone 8 & no upgrade path, the recent price slash of Lumia 900 should bring it crashing down. Nokia’s patents are apparently valued at $6 billion, of which Elop plans to sell half to get some leeway until next year.  Their cost cutting exercise seems to have bore fruit as they are burning through much less cash than the markets expected it. Remarkably, Nokia’s shares rose 15%.

They do have something cooking for Nokia World this year, nothing short of a PureView Windows Phone 8 device will do A-N-D they have to ship it the next day, delaying it till Windows Phone’s general availability will be its death knell.Nokia’s survival now depends on Microsoft giving them a first-mover advantage. This would also bode well for Microsoft given no other OEM seems to promote Windows Phone like Nokia do. They can push the current Lumia range downmarket giving consumers the best of both worlds – Unique Design coupled with a refined OS.

Onto Google,

Google has announced a steady climb in earnings from last year, with $12.21 billion in revenue for the second quarter of 2012. The company saw a net income of $2.79 billion, and total revenue was up 35 percent from last year. Its aggregate paid clicks were up 42 percent from the same time in 2011.

More of the same Google growth story~ Wonder why they stopped flashing the Android activation numbers though? This is a significant quarter for Google, given that they completed the Motorola acquisition & on-boarded nearly 20K employees.Motorola’s healthy contribution aside, they still seem to oblivious to the current climate. Yeah their recent Atrix HD seems to be garnering positive reviews but they still don’t have a legitimate “superphone” competitor to the HTC One X/Galaxy S3.

Finally Microsoft,

Microsoft has posted a net loss of $492 million. Despite record revenue of $18.06 billion, the company was weighed down by what it’s calling a “goodwill impairment charge” of $6.2 billion — namely, the write-off of its 2007 acquisition of aQuantive.

Microsoft’s first loss-making quarter in its 26 year history? “Not per se” That knee-jerk aQuantive acquisition in response to Google’s buyout of DoubleClick(in 2007) came back to bite them in the ass! Apart from this, they seem to be doing well for themselves, of course, their ‘Online Services’ division posted yet another loss beating last years’. ‘Entertainment & Devices’ division comprising of the Xbox & Windows Phone pulled ahead with a 20% jump in revenue to $1.7 billion. The Xbox 360 is still the ‘King of Consoles’ topping sales 18th month in a row amidst falling sales. Their next quarter is probably the most important one with all their products & services Windows, Windows Phone, Windows Server, Azure undergoing a major revamp. Apparently, Office won’t be released until February 2013.