Save from as low as €40 per month
Change modify pause
Nokia Oyj (NOK1V), the Finnish mobile-phone maker seeking a comeback, reported its smallest quarterly revenue in 13 years as handset demand waned, missing analysts’ estimates and sending its stock down as much as 13 percent.
First-quarter sales fell 20 percent to 5.85 billion euros ($7.6 billion), Espoo, Finland-based Nokia said today. Analysts projected 6.52 billion euros, the average of estimates compiled by Bloomberg. Mobile-phone volumes slumped 25 percent.
Competition from Asian manufacturers building phones that run Google Inc.’s Android software is hurting demand for Nokia’s basic handsets. The sales miss puts Chief Executive Officer Stephen Elop’s recovery effort at doubt, as nascent demand for the company’s Lumia smartphones isn’t enough to offset plummeting demand for
Nokia’s older models.
“The lower-end mobile phone business is not doing well,” Mikko Ervasti, an analyst at Evli Bank Oyj in Helsinki, said in a phone interview. “They need to start pushing their Microsoft- based Lumias into cheaper prices to gain traction in emerging markets.”
Nokia fell as low as 2.30 euros and lost 9.4 percent to 2.39 euros at 2:02 p.m. in Helsinki. The stock tumbled 22 percent last year, its fifth straight annual drop, and has lost 10 percent this year through yesterday.
The revenue was the smallest since the third quarter of 1999, when Nokia was still a more diverse company with business lines including computer monitors.
Sales of the flagship Lumias running Microsoft Corp. (MSFT)’s Windows software rose to 5.6 million units from 4.4 million in the fourth quarter as Nokia added versions. Apple Inc. (AAPL) and Samsung Electronics Co.’s quarterly smartphone sales exceed 100 million units combined.
Nokia sold a total of 61.9 million mobile devices during the three months. Analysts on average predicted 73 million units, including 5.7 million Lumias.
“People are responding positively to the Lumia portfolio,” Elop said in the statement. “On the other hand, our mobile phones business faces a difficult competitive environment, and we are taking tactical actions and bringing new innovation to market to address our challenges.”
Revenue at Nokia’s handset business slumped 32 percent to 2.89 billion euros. Operating profit at the unit, excluding some items, was 0.1 percent of sales. The company had predicted a margin of between negative 6 percent and positive 2 percent.
This quarter, that margin will be negative 2 percent, plus or minus 4 percentage points, Nokia predicted. Evli’s Ervasti predicts a margin of 0.7 percent.
To reduce costs, Elop has cut more than 20,000 jobs and closed production and research sites since taking over in 2010. For the last three months of 2012, the company posted its first profit in seven quarters.
The first-quarter net loss narrowed to 272 million euros, or 7 cents a share, from 928 million euros, 25 cents, a year earlier.
Nokia Siemens Networks, the company’s equipment joint venture with Siemens AG (SIE), posted a first-quarter operating profit of 196 million euros, excluding some items, as sales fell 5 percent to 2.8 billion euros.
Nokia’s net cash increased to 4.5 billion euros from 4.4 billion euros at the end of December. Nokia’s debt is at junk status with the three main rating companies. In January, Nokia scrapped its dividend for the first time in at least 143 years to bolster its liquidity position.
Once the world’s largest smartphone maker, Nokia had more than 50 percent of the market before Apple’s iPhone and Google’s Android were introduced about six years ago. Nokia has lost about 90 percent of its market value since then and fallen outside the top-five smartphone makers.
In the last three months of 2012, Cupertino, California- based Apple sold 47.8 million iPhones and South Korea’s Samsung, the biggest maker of Android devices, sold 62 million smartphones.
Elop, who joined from Microsoft, started betting on his former employer’s operating system after Nokia’s homegrown Symbian software fell out of favor among consumers.
You are signing up to receive news, updates, general market announcement, articles and product or service marketing. By signing up you are consenting