Bad News for Microsoft: Nokia Phone Sales Fall in Q4

What's This?

The Nokia Lumia 1020 smartphone is displayed during an announcement event in New York on July 11, 2013.

Image: Diane Bondareff/Invision for Nokia/Associated Press

By Seth Fiegerman2014-01-23 12:56:15 UTC

So much for going out on a high note.

Nokia reported Thursday that net sales for its devices business — which Microsoft has agreed to acquire — were about $3.55 billion in the fourth quarter of 2013. That represents a 29% year-over-year decline in net sales for this division.

The company blamed the poor performance in this division, which it is now referring to as "discontinued operations" as a result of the acquisition agreement, to growing competition in the smartphone market.

"Our Mobile Phones net sales were affected by competitive industry dynamics, including intense smartphone competition at increasingly lower price points and intense competition at the low end of our product portfolio," the company noted in its earnings report. "Our Smart Devices net sales were affected by competitive industry dynamics including the strong momentum of competing smartphone platforms,

as well as our portfolio transition from Symbian products to Lumia products."

The Lumia smartphones in particular have been a bright spot for the company in recent quarters. They're likely a big incentive for Microsoft's acquisition of the business because these devices are among the most popular Windows phones. However, Nokia did not disclose Lumia numbers — or sales for any of its phone models, for that matter — in the most recent quarter, citing them as part of "discontinued operations."

This marks what will likely be Nokia's final full quarter before Microsoft officially acquires its devices and services business. The deal was first announced in September and has since received regulatory approval in the U.S. and the European Union. The purchase is expected to be completed in the first quarter of this year.

Nokia's stock dipped by as much as 4% in pre-market trading following the earnings report. Microsoft stock was up by about 0.5%.

Topics: Business, Microsoft, Nokia, smartphone