Nokia shares plummet following Q2 sales warning

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Analyst says abandoning Symbian before release of Windows Phone handsets likely to have hit Nokia sales

Nokia has warned that sales for the quarter ending June 30 will be well short of the €6.6bn it had previously predicted, and the firm may not make a profit for the quarter.

In the previous quarter Nokia made €690 million profit on €7.1 billion in revenue, but revenue this quarter is expected to be substantially below that figure, with margins short of the 6 to 9 per cent the firm had predicted.

The dip in the current quarter may be the result of dealers and consumers reacting to the firm’s decision to announce it is discontinuing its Symbian operating system before bringing smartphones running Microsoft’s Windows Phone to market.

The warning for the current quarter has sent the Finnish mobile maker’s share price tumbling more than 17 per cent to a 13-year low, and has added to concerns the firm is unable to cope with the shift towards smartphones.

Nokia has withdrawn its 2011 predictions, saying it was no longer “appropriate” to provide targets for the year ahead.

Though Nokia is still the largest smartphone maker, its share of the market by shipments fell to just 24.9 per cent in the first quarter of 2011, and on announcing its most recent results, Nokia said its share of the total handset market had slipped from 33 per cent to 29 per cent in the last year alone.

The firm is now pinning its hopes on a partnership with Microsoft announced in February.

However, Ovum devices and platform analyst Nick Dillon (pictured) told Mobile News that the poor Q2 performance may be partly due to the firm underestimating the impact of the announcement.

“Looking back on it it’s quite understandable how that has been badly perceived by the market.

“They are in this limbo at the moment, they’ve killed off one platform, but they haven’t got any Windows Phones in the market. From the consumer perspective as well, they aren’t going to buy into that.”

Nevertheless, Dillon said that he is “relatively confident” that Nokia will be able to meet its target of getting a Windows Phone handset out before the end of the year.

“Their next challenge is to differentiate their products against the growing number of OEM’s who are going to produce Windows Phone handsets.

“At the announcement in February, there was an allusion to the fact that Microsoft were giving Nokia free reign to customise the software as it sees fit. It will be interesting to see if that will be superficial or something deeper to make the handsets really standout.

“Of course the flip side of that is it starts to threaten the platform more widely, and that is something you would expect Microsoft to push against.”

 

1 COMMENT

  1. The condition is really bad and I fear getting it worst. Nokia must gear up and come back with some really good devices to increase its market share.

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