Nokia worries deepen ahead of quarterly results

Nokia HQ

Finnish phone manufacturer Nokia will shut down two of its four regional sales offices in China as part of its restructuring plans. The news comes in the same week that the firm has slashed the price of its flagship Lumia handset, with both developments setting the tone for the company’s 2Q12 earnings announcement, due on Thursday.

Nokia will shut its offices in Chengdu and Shanghai, and consolidate operations in Beijing and Guangzhou, according to Bloomberg. The move will see the Finnish firm cut a number of jobs in China, but it did not specify how many. Nokia has already pledged to cut 10,000 jobs worldwide by the end of 2013 as part of its restructuring process.

The Chinese development comes as Jolla – a start-up firm aiming to design, develop and sell MeeGo based smartphones set up by a group of former Nokia executives – won its first sales deal in China. Jolla’s handsets will be sold in the country through Chinese retail chain D.Phone.

MeeGo is a free, Linux-based mobile operating system project that was first announced at Mobile World Congress 2010 by Nokia and Intel. Nokia launched its first and last Meego handset (the N9) in September that year. Jolla aims to pick up where Nokia and Intel left off, and is staffed by ex-executives from Nokia’s MeeGo N9 organisation, together with some of the developers from the MeeGo open source community, who had worked on the platform.

Meanwhile, Nokia has also slashed the price of its flagship smartphone, the Lumia 900, in the US. Nokia sells the handset exclusively through AT&T, which is ranging the phone from $99 to $49 on a two-year contract, although the price plans on offer remain unchanged.

Nokia said in a statement that the price reduction is normal for a product in this stage of its lifecycle. However, the company’s share price dropped three per cent on the Helsinki Stock Exchange on Monday morning, following the announcement.

Nokia has already said that it expects to incur restructuring charges of €1bn for the Devices & Services unit and has also warned that continued competitive difficulties would mean a worse than forecast performance for the unit. Nokia had previously forecast an operating margin of negative three per cent.

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