Device operating systems

Nokia Lowers Outlook, Shares Slump

Nokia Corp. (NYSE: NOK) on Tuesday lowered its sales and margin outlook for the second quarter of 2011 and the news sent its shares tumbling 14 percent.

The Finnish phone maker said that net sales for its devices and services business in the second quarter would be "substantially below" the previously stated range of €6.1 billion (US$8.8 billion) to €6.6 billion ($9.5 billion), due to lower average selling prices (ASPs) and lower device volumes.

The company also lowered its outlook for devices and services operating margin in the second quarter from a range of 6 percent to 9 percent to "around breakeven." The drop is due to the lower than expected net sales.

With such an unexpected change in outlook, Nokia said it will no longer provide annual targets for 2011.

Nokia cited several factors that are hitting its business harder than expected in the second quarter, and these include: "the competitive dynamics and market trends across multiple price categories, particularly in China and Europe; a product mix shift towards devices with lower average selling prices and lower gross margins; and pricing tactics by Nokia and certain competitors."

The company reiterated plans to ship the first Nokia product with Microsoft's Windows Phone in the fourth quarter of 2011.

Why this matters
The surprise financial news shows that Nokia's turnaround and its transition from the Symbian to the Windows Phone operating system could be a lot more painful than expected.

CEO Stephen Elop said in a statement, "Strategy transitions are difficult." But, after today's news, the question is: Will this transition get even more difficult? For more
Here's the latest on Nokia's transformation:

— Michelle Donegan, European Editor, Light Reading Mobile

jepovic 12/5/2012 | 5:03:43 PM
re: Nokia Lowers Outlook, Shares Slump

Nokia also hinted that NSN is up for sale. They are letting investors scrutinize the entity to get some bids.

I wonder who picks it up. Ericsson would seem natural, but they are traditionally sceptical about major aqcusitions. Also, such a company could run into anti-competition problems with the regulators, since the market share would be massive in many parts of Europe. I doubt that it's politically possible to sell NSN to a chinese investor, given the security implications.

Pete Baldwin 12/5/2012 | 5:03:42 PM
re: Nokia Lowers Outlook, Shares Slump

> Nokia also hinted that NSN is up for sale. They are letting investors scrutinize the entity to get some bids.

Very interesting.  I agree with you that a sale to a Chinese interest would be difficult ... but it might be the area where NSN would draw the most interest.

I wonder if most competitors would benefit more from having NSN just die out, versus acquiring them. (That goes for any other competitor too; I'm thinking of the spread-out market shares in the optical equipment business.)

jepovic 12/5/2012 | 5:03:41 PM
re: Nokia Lowers Outlook, Shares Slump

My guess is that NSN will be sold in pieces, like Nortel. I doubt that they can find an industrial partner for the entire company that fits all the requirements. The development of the merged NSN and Alcalu is just lousy. But I'm sure Ericsson, Cisco and others would be interested in some pieces. And what value would a financial investor bring, other than selling the company in pieces?

Like Nortel though, the biggest pieces (eg wireless) are the most troubled.

Between the market leader Ericsson and the chinese cost leaders there seems to be very little profitable business left in telecom.

Sign In