Nokia warns of losses in face of "competitive industry dynamics"

Finnish handset vendor Nokia has announced that is expecting to report a loss for the first two quarters of 2012. In a statement released Wednesday the firm blamed “competitive industry dynamics” for damaging net sales for its Mobile Phones and Smart Devices business units, particularly in the Middle East and Africa, India and China.

The announcement takes the shine off the recent resurgence of Nokia’s high end products under the direction of Stephen Elop. The ex-Microsoft executive said the poor performance reflected an organisation still evolving to meet its targets. “Our disappointing Devices & Services first quarter 2012 financial results and outlook for the second quarter 2012 illustrates that our Devices & Services business continues to be in the midst of transition,” he said.

Nokia said that its Q112 operating margin for Devices & Services was “approximately negative three per cent,” compared to the previously anticipated breakeven. “Nokia expects its non-IFRS Devices & Services operating margin in the second quarter 2012 to be similar to or below the first quarter 2012 level,” the firm said. The Smart Devices gross margin is approximately 16 per cent, the firm said.

It also expressed concerns that second quarter performance would be affected by “timing, ramp-up, and consumer demand related to new products,” as well as the macroeconomic environment.

The firm said it expects to report net sales of 12 million units for its revamped Smart Devices segment for the first quarter. Of this, two million were Lumia devices, with an average selling price of €220.