On Thursday, Nokia (NOK) put in a pre-earnings announcement for a good quarter, which is scheduled to be fully reported later this month. The company reported selling 4.4 million Lumia smartphones, 2.2 million Symbian smartphones, and 9.3 million Asha smartphones. Sales of low-end feature phones came to about 70 million units.
The big positive in this news is that Lumia sales have climbed. In the second and third quarters, the company respectively sold just 2.9 million and 4 million of these phones. It's hard to get excited about the Symbian sales, as this is a dead and declining platform. The Asha smartphones aren't really smartphones, and they too will probably be gone within a few quarters.
So the excitement is all about 4.4 million Lumias. These helped Nokia "approach profitability" in their handset division.
Apple (AAPL), of course, has been selling about 20 million to 30 million iPhones each quarter for the past year. But investors have had low expectations for Nokia, so these preliminary results were good enough to send the stock up nearly 20% Thursday.
The news also buoyed shares of Research In Motion (RIMM), which rose about 4% Thursday. People are now starting to wonder how well the new BB10 phones will do upon release at the end of the month.
Despite the long wait for the device, the reviews of the BB10s have been solid so far. RIM has also announced that it will sell its QWERTY keyboard phone, along with a touch version. The company's chief marketing officer, Frank Boulben, has also said RIM will release at least another six versions of the BlackBerry later this year. These will presumably address the lower end of the market, which is critical for RIM, as the company is still doing well in many emerging-markets countries.
How many smartphones can RIM sell? Is 4.4 million -- what Nokia is achieving with the Lumias -- the magic number it should be shooting for?
In the last reported quarter, RIM sold 6 million to 7 million of its old BB7 phones -- a platform that is more than two years old. So it appears highly realistic to me that, right off the bat, carriers of the BB10 devices could see some very big restocking numbers, relative to Nokia. After all, the company will continue to sell its lower-end BB7s as it tries to massively push its installed base to upgrade to the BB10s.
It doesn't at all seem unrealistic to expect that we could see a doubling -- at least -- of smartphone shipments in the first full reported quarter after the BB10s ship (which won't be until June). Even 20 million phones is a possibility for that quarter.
At such volumes, RIM will be very profitable. Remember that analyst Tavis McCourt has said RIM only needs to sell 18 million phones in the whole year in order to break even? In all likelihood RIM could achieve that just by continuing to sell its dying BB7s.
Further, RIM is a company with $6 billion in market capitalization -- still less than half that of Nokia. So bigger handset-sales success will translate into bigger moves in the stock price, even amid concerns that services revenue from businesses will decline over time.
That is partly why RIM is holding up so well today, even though BMO Capital Markets downgraded the stock and there are reports of a service outage in Europe. Unless the company really screws up in its go-to market -- and it's hard to see that happening, given how many carriers are testing it and have likely given the company pre-orders -- it should shatter the sales that the Lumia has been able to achieve so far. That should lead to even bigger bumps than what we saw with Nokia as we get closer to the June earnings report.