Telecom Lead Europe: Nokia CEO Stephen Elop has shared
his strategies to further grow its Location & Commerce business.
Nokia CEO says Nokia has the potential to redefine and
become a giant in the location and commerce business. He cited the examples
like Facebook’s position is social media and Google’s leadership in online
search and advertising business.
We are investing in this business because we believe the
mobile device will become the nucleus for gathering real-time data through
sensors,” said Nokia CEO Stephen Elop.
Nokia purchased NAVTEQ, which has the world’s biggest
map, because of the opportunity for location-based services on mobile devices.
Today, 4 out of 5 cars with on-dashboard navigation use Nokia technology.
In light of our new focused strategy, we believe we can
take even more advantage of this asset. Our year-on-year increase in Location
& Commerce net sales in the second quarter was helped by higher sales of
map licenses to auto industry customers. While our business with auto industry
customers continued to grow, we also made good progress establishing our
location-based platform with businesses like Yahoo!, Flickr and Bing. And we
plan to announce new partners in the coming weeks and months,” Elop told
analysts when discussing Q2 result.
But we are not stopping there. Our aim is to become the
where company. Just as Google redefined the what with search and Facebook
redefined the who with social media, Nokia intends to redefine the where with
mapping and location-based services. A broadening array of devices and
experiences could capture our location, orientation, speed and even pulse rate
while understanding our social media preferences, our likes, our dislikes and
our passions. With our NAVTEQ asset and focused execution, we believe we can be
a leader in this next generation of experiences,” Elop added.
Nokia is planning to broaden the price point range of
Lumia devices to price points both higher for better gross margins and lower
for volume. Additionally, we are investing in new materials, new technologies
and location-based services for a great consumer experience, according to a
report in seekingalpha.com.
Location & Commerce contributed approximately EUR 100
million negative. Within Location & Commerce, the negative cash charge in
working — negative change in working capital was primarily due to decrease in
payables.
Nokia’s Location & Commerce business reported EUR 283
million net sales, up 2 percentage sequentially and up 4 percentage
year-over-year. On a sequential basis, the increase in Location & Commerce
net sales was primarily due to higher sales of map content licenses to vehicle
customers. Initial map license sales increased sequentially, as well as update
map license sales. This was partially offset by a negative sales adjustment
related to historical license fees in the normal course of business for a
particular customer.
In Q2, Location & Commerce non-IFRS gross margin was
77.4 percent, approximately flat sequentially. This was primarily due to an
improved revenue mix from higher margin vehicle map license sales, offset by the
negative sales adjustment I just mentioned. Location & Commerce non-IFRS
operating margin was 14.5 percent in Q2, up 160 basis points sequentially,
primarily due to higher revenues.