Nearly two many years ago, Stephen A. Elop, Nokia's new chief executive, spoke of flaming ocean platforms and shark-infested waters to describe the complications he inherited because the firm teetered about the brink of irrelevance.
Mr. Elop painted the bleak outlook as he prescribed a radical remedy for that Finnish cell phone pioneer: The rejection from the company's very own Symbian smartphone operating process to get a shotgun wedding to Microsoft, itself stumbling badly with smartphone program. Soon after that, product sales slumped sharply, losses mounted and big layoffs followed.
On Thursday, he delivered sudden fantastic news: a profit. Revenue of its new smartphone line, the Lumia, powered by Microsoft's Windows Cellphone operating process, soared greater than 50 % during the fourth quarter of final year, as outlined by preliminary economic data.
In what was observed being a make-or-break quarter, Mr. Elop explained Nokia would break even or turn a two % profit as an alternative to report a reduction as massive as ten %, as analysts anticipated.
Nokia will report its earnings on Jan. 24.
Wall Street reacted towards the announcement by sending Nokia's American depositary receipts up 18.67 %, or 70 cents, to $4.45.
"While we undoubtedly skilled some challenging issues during the to start with half of 2012, we're managing by way of these troubles," Mr. Elop stated within a conference contact with journalists.
What Nokia has achieved below Mr. Elop is usually to deliver a line of more and more competitive smartphones which have been commencing to draw favorable comparisons with people from Samsung and Apple, the 2 corporations most accountable for knocking Nokia from its lofty perch.
"The Lumia smartphones are night-and-day diverse from Nokia's old Symbian handsets," explained Francisco Jeronimo, an analyst using the Worldwide Information Corporation in London. "I believe what we're commencing to view now is what might be a steady turnaround in Nokia's fortunes."
The firm, which dominated the cellphone enterprise till Apple introduced its iPhone in 2007, nonetheless includes a prolonged method to visit accomplish its former stature. While in the third quarter, Nokia held on to a four % share from the worldwide smartphone market place, and was ranked a distant No. ten inside the sector, as outlined by System Analytics, a analysis company.
Samsung and Apple, the No. one and No. two smartphone makers, collectively had 50 % with the international smartphone industry, and their product sales have been expanding. When its rivals rose, Nokia has produced just about five billion euros ($6.five billion) in losses below Mr. Elop, and eradicated a third of its do the job force.
The important thing to its turnaround was the introduction in October from the top-of-the-line Lumia 920 and 820, which utilized the new Windows Mobile phone eight operating process. Because then, Nokia has spent heavily on promoting in Britain and Europe to advertise the designs. The corporation is not going to disclose simply how much it had spent on its campaign, but its tv adverts had been ubiquitous above the holidays, stated Neil Mawston, an analyst at Technique Analytics in London.
The heavy promotion, which was aided by Microsoft's personal marketing, has assisted the organization recapture a few of its lost glory, Mr. Mawston explained.
But he warned that "Nokia nevertheless lacks the genuine killer mobile phone that can allow it to compete with all the iPhone five or Samsung Galaxy S III." He anticipated Nokia's share in the international smartphone industry to rise to six % from the finish on the year.
The company's money place is most likely to revive a lot more promptly due to the rigid cost-cutting imposed by Mr. Elop, who ran Microsoft's business enterprise program division well before joining Nokia in late 2010.
Because then, Nokia has shut factories across Europe. Final month, the corporation sold its 540,000-square-foot glass-and-wood headquarters inside the Helsinki suburb of Espoo to Finnish investors, and leased it back. The maneuver netted Nokia 170 million euros.
Apart from a additional competitive array of phones, Nokia has discarded its market-leader mentality. Staff members are now routinely traveling in economic climate class and sharing rides to airports. Employees no longer use high priced phone conference calling but talk in group teleconferences applying much less highly-priced World-wide-web calling providers.
"The firm is often a good deal smaller sized now but individuals are operating greater collectively," mentioned Susan Sheehan, a Nokia spokeswoman. "Everyone has become pitching in."
Even at Nokia Siemens, the company's long-suffering network gear venture, the long term is searching brighter than it had been two many years ago. On Thursday, Nokia explained the unit, which contributes about 40 % of complete product sales, would report an operating profit for that quarter, its third consecutive quarterly profit.
Nokia, in its announcement to investors, even revised the operating profit margin forecast on the venture to 13 to 15 % of product sales, up from a array of four to twelve %.
Wanting ahead, Nokia mentioned it anticipated to return to an operating reduction of two % of revenue due to the first-quarter postholiday getting lull and fierce competitors. However the benefits for that coming 3 months could differ broadly.
Pete Cunningham, an analyst at Canalys, a analysis company in Reading through, England, mentioned that Nokia nonetheless faced difficulties. "2013 could nevertheless turn out to get a further pretty challenging year for Nokia. It really is way also premature to state that the firm has manufactured a turnaround."
Mr. Cunningham mentioned he applied the Lumia 920, Nokia's newest smartphone, for the duration of the Christmas holidays and liked it.
"But the extra I utilised the mobile phone, the additional obvious it became to me that there are actually large gaps among Lumia and its rivals regarding the performance and usability of its apps," Mr. Cunningham explained.
"I nevertheless imagine there may be a great deal of get the job done to get completed on Lumia."
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