Nokia sells 417.1m phones, loses $1.4b. Apple sells 60m phones, makes $12b. What gives?

[thermal]

Just saw a report out today that despite selling a total of 417.1 million phones in 2011, Nokia is posting a loss of Euro 1.4 billion for the year.

Nokia submits yearly SEC report, details ?1.4b loss and Windows Phone risks -- Engadget

Apple only sold about 60 million phones last year, yet posted a profit of some $12 billion.

Not quite understanding this. How does a company sell 417 million of Any product, yet post such a loss? Wouldn't they be making a small net profit off every phone sold?

 

[mrspeedmaster]

They (Nokia) sell $30 BoGo phones in the developing world. Those phones have razor thin margins. $2-5. If they over-produce or cannot effectively gauge the market fluctuations, they can lose money. They lose money if the product sits on the shelf, returns, advertising, shipping,etc..

Apple makes about $300-400 in margin on an iPhone.

Also, It is all about supply-chain logistics. Timothy Cook, somehow, is a genius in determining how many to produce, how many inventory to carry on hand, how much to order,etc...

Before he came to Apple, Apple's product had a 2 month wait time;sitting in the warehouse. After he arrive, products only sit in the warehouse less than a day. In fact, they now get drop ship straight from the factory.

Nokia doesn't have the supply-chain mastery that Apple commands. Like produce, if your product sits too long, it loses value. Plus, you need to only order enough ingredients (components) to keep your business running.

Lastly, I also think a big chunk of the loss is attributed to the restructuring.