Nokia cuts losses but sales are still declining

Nokia has announced net sales of €5.7bn in its second quarter 2013 results, down 24% from €7.5bn in the same quarter last year.

The company has decreased its operating losses from €824m to €115m, helped by Nokia Siemens Networks turning a profit and reducing losses on mobile phone sales.

Nokia Siemens Networks saw a 17% decrease in net sales year on year, from €3.3bn to €2.8bn, but this arm of the business made a profit of €8m this quarter, up from a €226m loss in the second quarter of 2012.
The companies recently announced that Nokia has bought Siemens out of the business for €1.7bn.

“With our recent purchase of Siemens’s 50% stake in Nokia Siemens Networks, we believe we will create value for Nokia shareholders and look forward to strengthening Nokia Siemens Networks as a more independent entity,” said Nokia CEO Stephen Elop.

Devices and services managed to reduce its scale of loss from €473m to €33m year on year, but revenue was still down 32% from €4bn in the second quarter last year to €2.7bn in the same quarter this year.
Sales of smart devices dropped 27% from 10.2 million to 7.4 million, while sales of non-smart mobile devices also fell by 27%, from 73.5 million to 53.7 million.

The Lumia smartphone range saw continued growth, rising from four million units in the second quarter of 2012 to 7.4 million in this year's second quarter.

But it is sales of lower-end mobile devices that the company has, in the past, managed to sell in volume. The company launched its Asha 501 “affordable smartphone” in June.

"While we are very encouraged by the consumer response to our innovations in this price category, our mobile phone business unit is planning to take actions to focus its product offering and improve product competitiveness,” said Elop.

Nokia’s once mighty Symbian operating system has decreased from six million units to “approximately zero”.

Chief Leaves Barnes & Noble After Losses on E-Readers

William Lynch Jr., the chief executive of Barnes & Noble, resigned on Monday, two weeks after a devastating earnings report that accentuated the bookseller’s losing battle against powerful rivals like Amazon.

Mr. Lynch’s departure was part of a series of sweeping changes the company announced as it tries to regain its footing after a failed initiative to build up its Nook division and compete in the increasingly crowded market for e-readers. When it revealed its fourth-quarter earnings late last month, Barnes & Noble said it would cease making its own color tablets, an acknowledgment that they were lagging popular brands like Amazon’s Kindle Fire and Apple’s iPad.

Instead, the company said it would form partnerships with third parties to make the color devices, while it continued to make and sell its own black-and-white versions of the Nook.

In a statement late Monday, the company said that Michael P. Huseby had been appointed chief executive of the Nook division and president of Barnes & Noble. Mr. Huseby has served as chief financial officer since joining Barnes & Noble in March 2012; previously he held that position at Cablevision Systems, a media company.

Max J. Roberts, the chief executive of the college division, will report to Mr. Huseby, while Mr. Huseby and Mitchell S. Klipper, the chief executive for the retail stores, will report to Leonard Riggio, the company’s chairman.

The moves on Monday appeared to be a step toward separating the digital and retail divisions, as the company has indicated it might do. Barnes & Noble has been in talks over a potential sale of its digital assets, as well as its 675 bookstores.

Microsoft is one potential buyer of the Nook business; last year it invested hundreds of millions of dollars to acquire 17.6 percent of the division.

Mr. Riggio has expressed interest in taking back ownership of the physical stores that make Barnes & Noble the largest bookstore chain in the country. Mary Ellen Keating, a spokeswoman for Barnes & Noble, declined to provide an update on that offer.

There was no indication that a new chief executive would be named.

“Because the company is in a transition period, we have no immediate plans to name a C.E.O.,” Ms. Keating said.

“We thank William Lynch for helping transform Barnes & Noble into a leading digital content provider and for leading in the development of our award-winning line of Nook products,” Mr. Riggio said in a statement issued Monday. “As the bookselling industry continues to undergo significant transformation, we believe that Michael, Mitchell and Max are the right executives to lead us into the future.”

The financial results for the fiscal fourth quarter underscored the urgency of the need to take action. The Nook unit showed a $177 million loss in earnings before interest, taxes, depreciation and amortization, or Ebitda, more than doubling the loss from the period a year earlier. Sales fell 34 percent, to $108 million.

The signs have been ominous for the company since the beginning of the year, when it announced that sales for the nine-week holiday period in late 2012 had declined at both its bookstores and in the Nook unit.

Mr. Lynch joined Barnes & Noble in February 2009, with no previous experience in bookselling. He was executive vice president for marketing at HSN.com and also worked for Gifts.com.

At the time, his arrival was hailed as a forward-thinking move, since Mr. Lynch, a Texas native, was only 39 years old and fluent in e-commerce and technology. Within months, Barnes & Noble introduced its first Nook e-reader.

To publishers, Mr. Lynch had performed a temporary miracle, helping create a product that provided a welcome competitor to Amazon’s Kindle, which dominated the market and offered e-books at a relatively inexpensive price.

The Nook was initially successful, drawing critical praise and capturing consumers who were uneasy about buying an e-reader — at the time a brand-new device — online, without testing it out in person. Barnes & Noble’s hundreds of retail stores allowed potential customers to see and touch what they were buying.

But even though Barnes & Noble quickly gained a sizable piece of the e-book market, it was not enough to ward off Amazon. And as black-and-white e-readers gave way to multifunctional color tablets, Barnes & Noble found itself competing unsuccessfully against companies many times its size, like Amazon and Apple, that have had technology in their DNA from the start.

As chief executive, Mr. Lynch worked from the company’s Ninth Avenue office in Manhattan, across town from the Fifth Avenue building where Mr. Riggio keeps his office. Mr. Lynch threw his energies into the digital side of the business, taking far less of an interest in the retail stores, and frequently flew to Palo Alto to build up Barnes & Noble’s presence in Silicon Valley, where their e-readers are designed.

Mike Shatzkin, the founder and chief executive of the Idea Logical Company, a publishing consultant, said a split of the business could help stave off the company’s decline.

“The Nook business clearly is going to need some global investment to have any kind of chance at all, and it certainly looks possible that they will be better off separate than together,” Mr. Shatzkin said. “There’s a glide path to oblivion, and you can affect the speed of the decline. Nobody’s going to bring back a robust brick-and-mortar book business.”

Top EU court says printers can be taxed to compensate for piracy losses

Europe's top court ruled Thursday that it is legal for countries to impose a levy on printer manufacturers in order to compensate rights holders for unauthorized reproduction of their work.

 

Under European Union law, authors and other rights holders have the exclusive right to authorize or prohibit reproduction of their protected works, but individual member states may provide exceptions or limitations to those rights.

 

In many cases, making private copies, including reproductions on paper, of works by rights holders is permitted. However if national authorities decide to permit exceptions they must ensure that copyright holders receive "fair compensation." This grants E.U. member states broad discretion in determining how to impose levies.



The European Court of Justice made its ruling after it was asked by the Federal Court of Justice in Germany to examine a case brought by VG Wort, the authorized copyright-collecting society representing authors and publishers of literary works in Germany.

 

VG Wort had requested that authorities order Canon, Epson, Fujitsu, Hewlett-Packard, Kyocera and Xerox to provide information on the nature and quantity of printers that they have sold since 2001. In addition, VG Wort claims that Kyocera, Epson and Xerox should pay it remuneration by way of a levy on personal computers, printers and plotters marketed in Germany between 2001 and 2007.

 

The court said it is open to Germany implementing a system in which owners of any printer, including multifunction devices, contribute to compensating authors for harm suffered by reproduction of their protected works. This means a levy on printer makers, the cost of which the manufacturers can pass on to customers.

 

The court does however limit the amount that can be levied. "The overall amount of fair compensation must not be substantially different from the fixed amount owed for the reproduction obtained through the use of one single device," the ruling said.

 

The court also said that even if rights holders don't take any measures to prevent copying of their work, such as using the EURion Constellation (a pattern of dots that will cause modern color copiers to lock up when they detect it), they are still entitled to fair compensation, since the use of such measures is voluntary.

 

However, E.U. countries may take into account whether such measures were used when determining the rights holders' compensation in order to encourage their use.

 

Follow me on Twitter @sajilpl