Nokia Oyj ADR NOK
Q2 2012 Earnings Call Transcript

Operator: Alexander Peterc, Exane BNP Paribas.

Alexander Peterc - Exane BNP Paribas: I'd like to clarify first on NSN, how sustainable do you think that the positive working capital development is real at NSN? Secondly, just on your margin guidance in D&S, the management (percent), does that include any further write-downs or is it done on a pure operating loss basis?

Timo Ihamuotila - EVP and CFO: Let me start on the NSN, Timo here. So first of all, on the networking capital development as we said, NSN now had positive development for three consecutive quarters and clearly it's fair to say that going forward it will become more difficult to extract cash from networking capital, but there is still some work that can be done there. So we are not finished, so I think there is some positive we can do there. Then regarding the non-IFRS operating margin guidance in Devices & Services, so I think Stephen actually went through the key dynamics there and I think the question was there any allowances planned in there. Now we have build a large range of scenarios given the fact that we are going through a transition quarter, and as was said if we have better than currently expected net sales on our Lumia devices during the transition, aided by some mobile phones, we could see a better performance. On the other hand, if we would see worse than expected sales on the Lumia devices going through the transition quarter, we could then also see some allowances, which we also mentioned in our press release.

Operator: Simon F Schafer, Goldman Sachs.

Simon F Schafer - Goldman Sachs: I wanted to follow up on the comment of IPR income of €400 million as part of the positive impact from working capital. Perhaps that's a little higher than perhaps the run rate you were talking about before. So maybe some color and how sustainable that sort of high run rate would be on the IPR side, that would be very helpful?

Stephen Elop - President and CEO: So the €400 million is an example of using the patent portfolio and our relationships prudently to help manage through a period where cash is very important to us. As we go forward, we will be looking for similar opportunities related to the patent portfolio, also related to other things we can do to generate cash and make sure that we continue to have the financial resources necessary, but I wouldn't take the €400 million as the beginning of a specific pattern or so forth. It's something that we have to work on in different ways every quarter. It's not something that sustains just as it stood.

Timo Ihamuotila - EVP and CFO: Maybe it could be helpful if I walk through the cash change here just briefly in detail, because it's also important to note that besides the €400 million, we actually had negative €360 million related to restructuring in our net working capital and in that sense those items fairly well balance out and we had underlying positive net working capital development as well.

Operator: Stuart Jeffrey, Nomura.

Stuart Jeffrey - Nomura: Since the Windows Phone 8 announcement, I guess we have no chance to really catch up. Could you just explain or elaborate how you manage Windows Phone 7.8 versus Windows 8, how you avoid confusion for the consumer and perhaps how do you reward some of the current Lumia purchases you might end up disappointed even if they are not aware they get at some point down the line, I guess they see Windows Phone 8 upgrades coming through and they might anticipate they would get that given that's the case in Android and in Apple. Perhaps tied to that, do you end up having two separate platforms with Windows Phone 7.8 long-term and Windows Phone 8 in order to get the $100 segment? Does that not become unnecessarily confusing?