Nokia’s 20-F: A Stark Picture Of Declines In Almost Every Key Area

Last week at Mobile World Congress, Nokia unveiled wave of new handsets from its fightback strategy that cuts through both the lower end of the market as well as the high. Some of it — like the new 41-megapixel camera on the Symbian PureView — is inspiring for what else might lie ahead.

But as for today, a more sombre picture, as the Finnish handset maker’s decline was laid bare in its 20-F annual report filing with the SEC. Between the many risks detailed at the beginning of the document and the declines in almost every key metric, Nokia has a tall task ahead to turn things around.

In 2011, Nokia had an operating loss of $1.4 billion, compared to an operating profit of $2 billion in 2010. Sales were down to $50 million from $56 million. And earnings per share also went into negative territory.

In devices specifically, net sales declined in almost every region except for the Middle East and Latin America, where they only grew one percent and nine percent, respectively. Important markets like Europe, Nokia’s largest, declined by 27 percent to a $7 billion business. And while China and Asia-Pacific once looked like they might become Nokia’s biggest markets, they too declined by 18 percent and 19 percent; these were both each worth about $5 billion in handset sales to the company.

In smartphones specifically — a key area where Nokia has now pinned its star to Microsoft — the company reported 77.3 million units sold for the year, down 25 percent from 2010. The average selling price for those devices was down, too, to $185 (less than the starting price for an iPhone out of contract).

The risks, meanwhile, read like a catalog of the many articles written here and elsewhere about the challenges that Nokia faces. They cover pretty huge issues like consumer interest in the Windows Phone platform — a platform that has actually declined in market share in the last year.

Another area that I think is worth pointing out are the concerns Nokia spells out about its own services, such as whether its investments in location and mapping will ever kick off as a profitable and big business. The mapping division that contains Navteq has seen some layoffs in the last year and despite being one of the smallest divisions in the company in terms of revenues ($405 million in the last quarter) reported an operating loss of $1.6 billion. On the plus side, this is a very high margin business for Nokia at the moment, with a 393.8 percent operating margin (compare that to the 12 percent in devices), so if Nokia can grow this, that can only be a good thing.

When I met with Stephen Elop, Nokia’s CEO, last week at Mobile World Congress, he highlighted how important location would be both for Nokia and for mobile services in the future. I don’t doubt that it will have a massive role in mobile going forward, but I can’t help but feel that the jury is very much still out on whether Nokia will be playing, too.