Waiting for WP7
Finnish mobile phone giant Nokia saw fit to issue a stock exchange release today, anticipating sales from its devices and services division will be ‘substantially' below its previously expected range of € 6.1 billion to € 6.6 billion for the second quarter. This is due to lower than expected prices and volumes, which weren't exactly bullish to start with.
Additionally Nokia will also fall substantially short of its previously expected margin range of 6-9 percent, and now expects to break even on the quarter.
Three main factors were identified for this shortfall. 1 - market trends, especially in China and Europe, 2 - a product mix shift towards lower priced devices, and 3 - pricing tactics by Nokia and certain competitors. This seems to amount to what we already knew - Nokia is not currently a smartphone player and is forced to sell its feature phones at increasingly low prices.
"Strategy transitions are difficult. We recognize the need to deliver great mobile products, and therefore we must accelerate the pace of our transition," said Stephen Elop, president and CEO of Nokia. "Our teams are aligned, and we have increased confidence that we will ship our first Nokia product with Windows Phone in the fourth quarter 2011."
That just about sums it up - Nokia is betting everything on WP7 and, until then, it will continue to lose smartphone market share and be reliant on the sub £100 market for sales. Such is the diminishing demand for non-smartphones, Nokia must have to be selling these with very little margin.
Given that things are so much worse than previously thought, Nokia says its outlook for the full year is no longer valid. Markets have reacted badly to all this gloomy news, sending Nokia's shares down over 16 percent at time of writing to their lowest level in 13 years.