Nokia’s revenues down 18pc, faced ‘challenging’ smartphone market

21 Apr 2011

Nokia reported €10.4bn in revenue in the first quarter of 2011, down 18pc from the last quarter.

The mobile company’s gross profits were €3bn, its operating profits were €439m and its diluted earnings-per-share was 9 cents.

Nokia has been facing difficulties in the mobile market, which is reflected in its Devices and Services group revenues. It recent formed a deal with Microsoft to use Windows Phone 7 OS on its mobile devices and it said it expects the full transition to make the OS its primary smartphone platform to take two years. For now, it will continue to leverage its Symbian platform.

Today, the two companies signed a definitive agreement for their strategic partnership to build a “new global mobile ecosystem that is unlike any other.” They said they are on track to deliver volume shipments in 2012, though acknowledge there is pressure to release a 2011 device.

Devices and Services

Its Devices and Services group experienced €7.1bn in revenue during this quarter, down 17pc from the last quarter and up 6pc from this time last year.

Operating profits decreased by 17pc year-over-year to €690m and was down 32pc from the last quarter.

Within this group, its mobile phones sector was down 14pc from the last quarter and for smartphones and mobile computers, it earned €3.5bn in net sales, down 19pc from the fourth quarter of 2010.

Nokia’s estimated share of the smartphone market was 26pc in this quarter, compared with 41pc this time last year and 31pc in the fourth quarter of 2010.

In terms of the volumes of mobile devices and services by region, there were 23.4m units in Europe, down 30pc from the last quarter and down 2pc year-over-year. Globally, Nokia’s volumes of mobile devices were down 12pc from the last quarter.

This drop over the last quarter was attributed to lower seasonal demand and “an intense competitive environment.” The company predicts it will impact its mobile device volumes through the second and third quarters of 2011 at least.

Nokia also said it will reduce this group’s operating expenses by €1bn for 2013, achieving this by reducing employees, outsourced professionals and facility costs, along with improving its efficiency.

The firm said that current employees, even those impacted by these cuts, will remain on the payroll through to the end of 2011.

The company expects this group’s revenues to be between €6.1bn and €6.6bn in quarters 2 and 3.

Nokia Siemens Network

For its Nokia Siemens Network group, its net sales were €3.2bn in quarter one of 2011, down 20pc from the last quarter, though up 17 percent year-over-year.

Nokia said its taxes were unfavourably impacted by this group’s taxes, due to the lack of benefits recognised for certain deferred tax items.