Nokia posts €1.34bn Q1 loss

Finnish vendor Nokia has announced an operating loss of €1.34bn for 1Q12, blaming “greater than expected competitive challenges and seasonality”. The Finnish firm posted net sales of just €7.4bn, down from the €10.4bn it posted in the first quarter of last year, in which it made €439m in operating profit.

Sales in the smartphone space stood at just 12 million units in 1Q12, less than half of the 24.2 million it shipped in 1Q11. While the feature phone space fell from over 84 million in 1Q11 to just 71 million units in 1Q12. The firm was also hit by €772m worth of charges related to restructuring activities for its infrastructure business, Nokia Siemens Networks.

Nokia CEO, Stephen Elop, said that the firm is undergoing a transition in a fast moving environment, but stressed that it has launched four Lumia devices ahead of schedule to “encouraging awards and popular acclaim”.

“The actual sales results have been mixed,” he admitted, however. “Establishing momentum in certain markets including the UK has been more challenging.”

He added that Nokia’s feature phones are now being challenged by full touch devices, and as a result the firm is taking measures to continue to renew its Series 40 platform.

“We plan to strengthen our line-up in Q2 2012. We are making investments in our Mobile Phones business unit aimed at addressing the gaps in our offering.”

Malik Saadi, principal analyst at Informa Telecoms & Media blamed the poor performance in the feature phone space on the proliferation of the grey market goods and competition from ODMs and domestic brands, particularly in China and India.

“Operators are starting to promote their own brands and require more flexibility from their OEM partners, which means that Nokia will find it hard to compete with the Asian manufacturers,” he said.

He added that the adoption of Windows Phone as the primary OS has not yet paid off as Nokia hoped.

“Sales of Lumia devices in Europe and other parts of the world continue to be below our expectations. The current high-end Lumia devices are still no match for the iPhone and Samsung’s top-end Android smartphones, and mobile operators are finding it much easier to sell devices on Android or iOS platform,” said Saadi.

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