Telecom Lead Europe: Nokia’s location and mapping service HERE posted 22 percent decrease in Q1 2013 revenue to €216 million against €277 million in Q1 2012.
Nokia’s poor performance in own phone business impacted location and mapping service revenue growth.
Nokia CEO Stephen Elop’s strategies to launch HERE as the new brand for its location and mapping service in November 2012 did not work out well for the telecom equipment and handset major.
Net sales from HERE’s internal business plummeted by 53 percent to €52 million from €111 million.
Substantial decrease HERE’s internal business was in line with Nokia’s phone sales.
Nokia says its devices & services net sales decreased 25 percent to €2.9 billion.
However, Lumia volumes increased 27 percent to 5.6 million units, reflecting increasing momentum
Mobile phones – primarily Asha range — volumes decreased 30 percent to 55.8 million units, reflecting competitive industry dynamics and an estimated higher than normal seasonal decline in the market addressable by mobile phones.
Revenue of HERE from external business declined 1 percent €164 million in Q1 2013 from €166 million.
Nokia said the decrease in external HERE net sales was primarily due to lower net sales to our personal navigation device customers as well as lower advertising revenue, partially offset by higher sales of map content licenses to vehicle customers due to higher consumer uptake of vehicle navigation systems and higher platform sales.
In the first quarter 2013, the sequential decrease in external HERE net sales was primarily due to lower seasonal sales to our personal navigation device and vehicle customers.
In the first quarter 2013, the year-on-year and sequential declines in internal HERE net sales were due to declines in sales, including lower recognition of deferred revenue, primarily related to our Smart Devices business unit.
Nokia’s HERE recorded -44.9 operating margin in the first quarter of 2013 against -33.9 percent in the same period last year.
Both on a year-on-year and sequential basis, the decreases in HERE gross margin in the first quarter 2013 were primarily due to lower net sales to our personal navigation device customers as well as lower internal sales.
HERE research and development expenses decreased 2 percent year-on-year due to cost reduction actions. On a sequential basis, research and development expenses decreased 11 percent in the first quarter 2013 primarily due to decreased product development spending.
The year-on-year decrease in HERE operating margin in the first quarter 2013 was primarily due to higher operating expenses as a percentage of net sales, lower gross margin, partially offset by lower other income and expenses as a percentage of net sales.