The world's top mobile phone maker Nokia reported a sharp quarterly switch into loss today, only the second quarterly loss since the company become world leader in 1998.
Analysts said that a deal reached with Apple to pay Nokia royalties on technology used in iPhones had saved the company from an even worse result.
The Finnish company posted a net loss of €368m compared to the €227m net profit it posted in the second quarter of 2010. The outcome was far worse than expectations of a loss of €104m.
Sales slipped 7.3% to €9.3 billion from €10 billion the same time last year.
'The challenges we are facing during our strategic transformation manifested in a greater than expected way in the second quarter of 2011,' chief executive Stephen Elop said.
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.
This strategy was coupled with plans to cut 4,000 jobs and outsource another 3,000 to Accenture, as part of a massive effort to slash operating expenses by €1 billion in 2013 compared with 2010 - a target Nokia said today it planned to exceed.
Nokia declined to issue any guidance on third quarter-sales expectations. The company said it hoped that the ramp-up of dual-SIM mobiles, an aggressive marketing campaign as well as a generally better global economy would help third quarter sales.
'We are making better-than expected progress toward our strategic goals,' Elop said.
But analysts said that Nokia is still struggling with its pricing policy, by trying to sell high-end Symbian smartphones at a time when consumers largely feel that Symbian is a dead-end technology.
Nokia shares have dropped sharply this year, recently hitting a low point of just €3.80 a share, a level not seen since 1997, and two-thirds less than the price in April 2010.
Although still the world's top mobile phone maker, Nokia's market value has plummeted to €14.2 billion from nearly €100 billion in November 2007.
