Wednesday, July 20, 2011

Nokia Cuts Outlook as Market Share Falls

Smart devices sales in Q2 fell 33% compared to the previous quarter, leading Nokia to report disappointing financial results. The company's Q2 2011 net sales were EUR 9.3 billion, down 11% from the preceding quarter and down 7% compared to a year earlier.

"The challenges we are facing during our strategic transformation manifested in a greater than expected way in Q2 2011. However, even within the quarter, I believe our actions to mitigate the impact of these challenges have started to have a positive impact on the underlying health of our business. Most importantly, we are making better-than-expected progress toward our strategic goals," stated Stephen Elop, Nokia's CEO.

Nokia said year-on-year and sequential decreases in Smart Devices volumes were caused by the strong momentum of competing smartphone platforms relative to Symbian devices, particularly in Europe and China, as well as pricing tactics by certain competitors. Network operators and retail distributors have been reducing their inventories of Nokia Smart Devices. The company said it is facing intense competitive pressure.

Overall, Nokia shipped 88.5 million mobile phones in Q2, down 18% from Q1.

For Nokia Siemens Networks, Q2 net sales were 3.6 billion Euro, up 15 percent sequentially and up 20 percent year over year. Non-IFRS gross margin was 26.6 percent, down 30 basis points sequentially, while non-IFRS operating margin was 1.1 percent, up 100 basis points sequentially. Nokia and Nokia Siemens Networks continue to target Nokia Siemens Networks net sales to grow faster than the market in 2011. The companies expect net sales to be between EUR 3.2 billion and EUR 3.5 billion in the Q3 2011.