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Nokia tanks after Q1 sales disappoint

Published: 10:40 18 Apr 2013 EDT

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Shares of Nokia Corp. (NYSE:NOK) fell more than 11 per cent on Thursday after the Finnish handset maker reported group sales fell 20 per cent year over year, citing an over 30 per cent decline in sales of smartphone devices and mobile phones amid a "highly competitive environment". 

Net loss in the first quarter came in at 0.07 euros, compared to a loss of 0.25 euros a year earlier.

Adjusted loss for the latest period was 0.02 euros, with analysts expecting a wider loss of 0.04 euros a share. 

Revenue, however, was 5.85 billion euros, down from 7.35 billion euros in the year-ago period. This fell far short of Wall Street estimates for sales of 6.55 billion euros. 

Sales in its devices and services unit fell 32 per cent to 2.89 billon euros, compared to 4.25 billion euros in the first quarter of last year, as smartphone device sales tanked 32 per cent and mobile phone sales, which focuses on mass market mobile devices, including Asha full touch smartphones, shed 31 per cent. 

Smart device volumes were 6.1 million units in the latest period, down 49 per cent year-over-year, while mobile phone volumes stood at 55.8 million units, lower by 21 per cent, with the company citing "competitive industry dynamics and an estimated higher than normal seasonal decline in the market addressable by mobile phones".

The company said Thursday it was taking "tactical actions" and brining "new innovation" to market to address these challenges. 

Adjusted operating profit in the devices and services unit was 4 million euros, up from a loss of 126 million euros a year ago, with an adjusted operating margin of 0.1 per cent in the latest period. 

The company said the division benefitted from a strong focus on costs as well as the reversal of approximately 50 million euros of previously recognized inventory related allowances in the first quarter. 

"We have areas where we are making progress, and areas where we are further increasing the focus. For example, people are responding positively to the Lumia portfolio, and our volumes are increasing quarter over quarter," said the company in the statement, citing CEO Stephen Elop. 

Indeed, the company said first quarter volumes of its Lumia phones increased 27 per cent quarter-on-quarter to 5.6 million units, reflection "increasing momentum". 

The Nokia Siemens Network unit saw sales decline 5 per cent in the first quarter to 2.80 billion euros on "industry seasonality", while the sector swung to an adjusted operating profit of 196 million euros, compared to a loss of 146 million euros a year ago. Adjusted operating margin was 7 per cent, compared to a negative 5 per cent in the same period last year. 

The company said Thursday the division benefitted from strong gross margin performance in the quarter. 

Nokia ended the quarter with gross cash of 10.1 billion euros, and net cash of 4.5 billion euros. 

Shares of the Finnish company were lately down almost 12 per cent, at $3.16 this morning, stretching year-to-date losses to almost 20 per cent. 

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