Nokia comments on poor results - Techey Archive

Nokia has commented on factors impacting its business and updated its second quarter and full year 2010 outlook for Devices and Services.

Although the company hasn't exactly said it, it seems its poor market share has to do with the fact that it hasn't got a high end smartphone to compete with the likes of LG and Apple.

Ernest Doku, editor of mobile phone comparison site Omio, told TechEye: "Whilst Nokia’s position in the high end market has certainly been shaken in the face of mounting pressure from Apple and RIM, ground lost in the mid-range heartland has also rocked the manufacturer, causing it to revise its strategy.

"Recently announced C-series devices - including Nokia's first ever dual-SIM phone in the C1-00 - mark a concerted effort to combat affordable offerings from LG and Samsung, while flagship handsets like the Nokia N8 are desperately needed to challenge BlackBerry and Android phones dominating the top end, as well as the imminent release of iPhone 4.

"The protracted journey to market for Symbian 3 and Meego powered devices is currently harming Nokia in the lucrative smartphone sector. It remains to be seen whether waiting until the third quarter to respond is too late to reverse current fortunes."

However Nokia's official statement only hints at smartphone competition. It claims that some of the problems are due to "the competitive environment, particularly at the high-end of the market, and shifts in product mix towards somewhat lower gross margin products."

The company also said that the recent depreciation of the Euro had affected Nokia's cost of goods sold, operating expenses and global pricing tactics.

It's released an updated outlook for Devices & Services for the second quarter 2010. In it the company said that it now expects Devices & Services net sales to be at the lower end of, or slightly below, its previously expected range of EUR 6.7 billion to EUR 7.2 billion for the second quarter 2010. This update is primarily due to lower than previously expected average selling prices and mobile device volumes.

Nokia now expects Devices & Services non-IFRS operating margin to be at the lower end of, or slightly below, its previously expected range of 9 percent to 12 percent for the second quarter 2010. This update is primarily due to a lower than previously expected gross margin.

It also said that it continued to expect industry mobile device volumes to be up approximately 10 percent in 2010, compared to 2009 (based on its revised definition of the industry mobile device market applicable beginning in 2010).

However it said it expected its mobile device value market share to be slightly lower in 2010, compared to 2009. This update is primarily due to the competitive situation at the high-end of the market and shifts in product mix. This is an update to our previous target to increase our mobile device value market share slightly in 2010, compared to 2009.

Nokia will provide its second quarter results and more details on its 2010 full year outlook when it reports its Q2 2010 results on July 22, 2010.