Nokia Lumia leads $270 million inventory write-off in Q2

Nokia today announced taking approximately $270 million (Euro 220 million) “inventory allowance” related to excess component inventory, future purchase commitments and an inventory revaluation related to its Lumia, Symbian and MeeGo devices. We had expected smartphones running on Symbian to account for most of the write-off considering it is an aging platform and Nokia has already moved on from it to focus on Windows Phone. However, it turns out Lumia led the write-offs, followed by Symbian and the MeeGo, the last one being just one device, the N9.

This was revealed by Nokia’s CFO Timo Ihamuotila in response to a question during the earnings call. This comes as a surprise, considering Nokia sold 4 million units of Lumia smartphones this quarter, almost double of what it did in the last quarter. The announcement of Windows Phone 8 in June along with the revelation that existing Lumia smartphones won’t get the update could have been one of the reasons but according to Nokia CEO Stephen Elop, “Lumia activations in weeks after the announcement were flat, to up.”

In all probability (and this is what we hear from our independent sources as well, the Lumia 800 did not do as well as Nokia would have hoped leading to inventory piling up. Elop also said during the call that Nokia would continue to have Windows Phone 7.5/7.8 smartphones even after Windows Phone 8 is launched and these would service the lower-end of the spectrum of Windows Phone platform. Considering Nokia won’t have any Windows Phone 8 devices in the next quarter, we can expect to see some price cuts in the existing Lumia smartphone range.