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'Greater than expected competitive challenges' blamed for disastrous numbers
April 19, 2012
ESPOO, FINLAND --
FINANCIAL AND OPERATING HIGHLIGHTS
Q1 2012 net sales of EUR 7.4 billion (Q1 2011: EUR 10.4 billion)
Non-IFRS EPS of EUR -0.08 and reported EPS of EUR -0.25
Losses incurred due to greater than expected competitive challenges and seasonality; reported losses also primarily driven by charges related to restructuring activities
Implementation of smartphone strategy proceeding:
Expansion of Lumia portfolio to cover higher and lower price points (Lumia 900 and Lumia 610 announced in Q1)
Expansion of geographic coverage to 45 countries currently (31 new countries in Q1)
Encouraging launch of Lumia 900 with AT&T in US in April
Renewing feature phone portfolio with 7 new Asha products ramping up
Taking action to drive improvements in the trajectory of Lumia sales and to support feature phone sales
Plans to accelerate and substantially deepen Devices & Services cost savings, consistent with strategic focus. Nokia will share further details as quickly as possible.
Balance sheet remains strong with EUR 9.8 billion of gross cash at end-Q1; EUR 4.9 billion of net cash at end-Q1
Estimates that current annual IPR royalty income run-rate is approximately EUR 0.5 billion
Commenting on the Q1 results, Stephen Elop, Nokia CEO, said: "We are navigating through a significant company transition in an industry environment that continues to evolve and shift quickly. Over the last year we have made progress on our new strategy, but we have faced greater than expected competitive challenges.
We have launched four Lumia devices ahead of schedule to encouraging awards and popular acclaim. The actual sales results have been mixed. We exceeded expectations in markets including the United States, but establishing momentum in certain markets including the UK has been more challenging.
At the same time, the lower price tiers of our industry are undergoing a structural change, and traditional feature phones are challenged by full touch devices. As a result we are taking deliberate measures to continue to renew our Series 40 platform, and we plan to strengthen our line-up in Q2 2012. We are making investments in our Mobile Phones business unit aimed at addressing the gaps in our offering.
We have a clear sense of urgency to move our strategy forward even faster. We are pursuing step function changes by having launched the Lumia 610 and Lumia 900 in the first quarter, expanding market coverage, increasing advertising, introducing key customer-requested features and broadening our most successful go-to-market activities. At the same time, we have focused our efforts in the low-end of smartphones and feature phone asset to drive improved business results and conserve cash.
We are confident in our strategy and focused on responding urgently in the short term and creating value for our shareholders in the long term."
Nokia Corp. (NYSE: NOK)
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