Despite selling 12m smartphones, Nokia warns of disappointing quarter

11 Apr 2012

Nokia’s Devices & Services division is still in the midst of transition, Nokia’s CEO Stephen Elop said today as the company warned its first-quarter financial results will fail to meet expectations.

Nokia estimates that net sales in the first quarter from the Devices & Services division were €4.2bn.

This included the sale of 71m (€2.3bn) mobile phones and 12m smartphones (€1.7bn) and achieving gross margin of 26pc and 16pc respectively.

During the first quarter, Nokia sold 2m Lumia devices at an average selling price of €220.

It said the Windows Phone ecosystem is attracting developers, with more than 80,000 apps now available.

In a statement this afternoon, Nokia said a number of factors affected its Devices & Services group, including competitive dynamics that affected mobile and smartphone sales in India, the Middle East and China, as well as gross margin declines in its Smart Devices unit.

Nokia misses break-even target

The company said operating margins for the first quarter of 2012 will be -3pc, narrowly missing an expected break even.

Nokia finished 2012 with €9.8bn worth of cash and other liquid assets.

“Our disappointing Devices & Services first quarter 2012 financial results and outlook for the second quarter 2012 illustrates that our Devices & Services business continues to be in the midst of transition,” said Elop.

“Within our Smart Devices business unit, we have established early momentum with Lumia, and we are increasing our investments in Lumia to achieve market success. Our operator and distributor partners are providing solid support for Windows Phone as a third ecosystem, as evidenced most recently by the launch of the Lumia 900 by AT&T in the United States,” Elop said.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years