Nokia Dives on Lowered Device Outlook
And that's not the only bad news the company suffered on Wednesday as a phone software glitch has marred the launch of its flagship Lumia 900 smartphone in the U.S. (See Lumia Software Bug Dims Nokia's US Hopes and Euronews: Nokia Hit by Lumia 900 Glitch.)
Nokia announced today that rather than the previously expected first quarter operating margin of about breakeven, ranging to above or below 2 percentage points, Nokia now expects an operating margin of negative 3 percentage points.
The company said the reasons for the outlook change in the first quarter were lower than expected net sales in phones and smart devices, particularly in India, the Middle East, Africa and China, as well as gross margin declines.
Nokia also said it expects second-quarter operating margin for the device and services business to be at or below the revised first-quarter margin estimate.
The second-quarter outlook is due to competitive industry dynamics continuing to negatively affect device sales, timing and consumer demand related to new products and the macroeconomic environment.
Nokia CEO Stephen Elop said on a call with media and analysts that the outlook showed that the company was "at the heart of its transition." He added, "We recognized greater than previously foreseen challenges."
More changes to come?
Nokia said it will respond to its revised financial situation by continuing to increase investment in Lumia smartphones, taking "tactical pricing actions" for its lower-end devices, as well as accelerating "planned cost reductions and [pursuing] additional significant structural actions if and when necessary."
— Michelle Donegan, European Editor, Light Reading Mobile