Nokia Reports $1.3 Billion Loss, Despite One Million Lumia Sales

Nokia Thursday reported a whopping $1.3 billion loss in its fourth quarter earnings despite selling more than 1 million Windows Phone-powered Lumia devices.

The Finnish smartphone maker's fourth quarter loss represents a staggering drop compared to the $1.2 billion in operating profit it reported during the fourth quarter in 2010. Nokia attributed the loss to sluggish mobile device sales during the three-month period. Smart device net sales were $14.2 billion, down 27 percent year-over-year, while mobile phone net sales took a similar nose dive, accounting for a yearly net sales of $15.8 billion, which is 13 percent lower than last year’s.

Nokia joined the ranks of Microsoft and Google this week, posting lower-than-expected quarterly earnings due, in part, to steep competition from mobile rival Apple. But there was some good new for the smartphone maker, thanks to Windows Phone 7.

In October, the company released its Lumia 710 and Lumia 800 smartphones, the first ever from Nokia to run Microsoft’s Windows Phone OS, and said sales of the new phones have been strong, despite a drop in overall device sales. The company has sold "well over" one million of its new Lumia devices, it said, but this number still pales in comparison to the 37 million iPhones sold by Apple in its most recent quarter.

Nokia CEO Stephen Elop seems aware of these numbers, noting in the earnings statement that the company will have its work cut out for it in 2012. "And, while we progressed in the right direction in 2011, we still have a tremendous amount to accomplish in 2012, and thus, it is my assessment that we are in the heart of our transition," Elop said in a statement.

The launch of Nokia's next-gen Lumia smartphone, the Lumia 900, may ultimately be the driving force behind that transition. The 900 is reportedly set to launch in March, and is being especially targeted at the North American market – a market that Nokia isn’t traditionally a huge player in.

"We have also started our important re-entry into the North American market. Earlier this month, T-Mobile started selling the Nokia Lumia 710 as a lead device," Elop said in a statement. "We also announced the new Nokia Lumia 900 with AT&T, and immediately received a number of industry awards. The Nokia Lumia 900 is our third Lumia device, our first LTE device designed specifically for the North American market, and AT&T is positioning the Lumia 900 as a lead LTE device."

Industry analysts including IHS iSuppli have already noted the Lumia 900’s potential to thrust both Nokia and Microsoft to the top spot among mobile vendors world-wide. The anticipated success of the phone is may even push Microsoft to the number two seat in mobile OS market share, beating out Apple’s iOS, RIM’s BlackBerry 10, and coming second only to Android’s Apple, iSuppli predicted.