Nokia faces unexpected challenge in its transition routes. Looses mount in Q1

Thursday, 19 April 2012
Finnish mobile giant, Nokia Corp. (NOK), the world's biggest handset maker last year, Thursday said it has faced greater than expected competitive challenge in its ongoing strategy overhaul, as the company reported heavy losses for the first quarter.

The Finnish mobile phone giant on Thursday posted losses of €1.34 billion in the first quarter of 2012. Net sales totalled €7.4 billion -- down by a staggering €3 billion from Q1 2011.
Net loss widened to €929 million from a €344 million net profit for the same quarter last year, against expectations for a €554 million loss. Revenue dropped 29 percent to €7.35 billion.
"We are navigating through a significant company transition in an industry environment that continues to evolve and shift quickly," CEO Stephen Elop said in a statement. "Over the last year we have made progress on our new strategy, but we have faced greater than expected competitive challenges."
Nokia says it now plans to speed up and significantly deepen cost savings in its Devices & Services unit.
At the time of the announcement, Nokia shares were trading at just over 3 euros on the Helsinki Stock Exchange.

Nokia warned last week that intense competition in fast-growing emerging markets would hit its performance in the first half of this year, as it undergoes a major strategy overhaul. Nokia is abandoning Symbian, its in-house phone operating software now considered by many to be clunky and old-fashioned, and is switching to Microsoft Corp.'s (MSFT) new Windows Phone software for its mobile handsets. Nokia-CEO

Nokia's first-quarter operating margin at its largest Devices & Services unit was a negative 5.2percent. It said it expects the second quarter to be similar to, or below, the first quarter level.
Nokia struck an alliance with Microsoft last year, adopting Windows Phone as its main smartphone operating system instead of Symbian. Nokia's Symbian smartphones are currently being phased out while the company works to ramp up its Windows-based Lumia series.
Since the switchover to Windows Phone, Nokia has undergone a tough transition period that is expected to continue through 2012. The new Lumia line has drawn mixed reviews.
"We exceeded expectations in markets including the United States, but establishing momentum in certain markets including the UK has been more challenging," said the Nokia chief executive.
Elop, who came to Nokia from Microsoft, is now under pressure to reverse the recent downward trend. Following last week’s profit warning for the first half of this year, he promised a “counterstrike” which would include new product launches and yet unspecified structural measures.
by Scancomark.se Team

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