Nokia warns of 'disappointing' smartphone sales in first half of 2012
Nokia on Wednesday issued a warning to investors that it was lowering its outlook for the first half of 2012 after the first quarter of the year proved "disappointing."
The Finnish handset maker had previously told investors it expected to break even on device sales during the quarter, but its operating margins proved to be around negative 3 percent. Nokia now expects its second quarter of 2012 to be similar to or below the first quarter.
"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," Stephen Elop, president and CEO of Nokia, said in a press release.
The company cited "competitive industry dynamics" as one of the chief reasons that its smartphones have struggled in the market, along with "timing, ramp-up, and consumer demand related to new products."
Nokia estimates that it sold 12 million "smart devices" in the first quarter of 2012, along with 71 million mobile phones. Its gross margins on smart device sales are estimated to have been around 16 percent.
Nokia said it sold more than 2 million of its new Windows Phone-powered Lumia handsets in the first quarter of 2012. The company said it has seen sequential growth in Lumia device activations every month since sales began in November of 2011.
"Within our Smart Devices business unit, we have established early momentum with Lumia, and we are increasing our investments in Lumia to achieve market success," Elop said. "Our operator and distributor partners are providing solid support for Windows Phone as a third ecosystem, as evidenced most recently by the launch of the Lumia 900 by AT&T in the United States."
Nokia's estimated sales of just 12 million smartphones in the quarter compare poorly to Apple, which analysts expect sold about 30 million handsets over the first three months of 2012. Apple previously reported record sales of 37 million iPhones in the holiday quarter that concluded calendar 2011.
The struggles for Nokia stem from the company's transition from its own Symbian platform to Microsoft's Windows Phone. In an internal memo issued soon after he took over Nokia, Elop referred to Symbian as a "burning platform" that Nokia needed to abandon in order to survive.
Nokia's announcement on disappointing sales comes just as the company has begun offering a $100 credit on its $99 Lumia 900 flagship smartphone, due to a software bug affecting data connections. New handsets with the issue fixes are on their way to AT&T stores, and a software update will be available for current users on April 16.
[ View article on AppleInsider ]
Comments
Nokia's announcement on disappointing sales comes just as the company has begun offering a $100 credit on its $99 Lumia 900 flagship smartphone, due to a software bug affecting data connections. New handsets with the issue fixes are on their way to AT&T stores, and a software update will be available for current users on April 16.
But I was under the impression that the smartphone beta test was over? /s
But I was under the impression that the smartphone beta test was over? /s
Yeah, but once you name a business unit "Our Disappointing Devices & Services", this might just not be enough...
But I was under the impression that the smartphone beta test was over? /s
Every time I see their ads on TV I get the impression that they are referring to their past (and current) smartphones when they say beta testing.
So, 3 million Lumia handsets to date then? Thats like a weekend launch for Apple.
This is how Nokia celebrates the 100th anniversary of the Titanic ... poetic isn't it.
That's too bad because the Lumia is the 2nd best looking handset on the market and WinPh is the 2nd best mobile OS on the market.
LOL - it looks like the anodized aluminum iPod from several years ago. Very innovative!!!!
Someone in Nokia must have got a tip off that Microsoft cannot get WinP 7 ready in time, so N9 and Symbian Belle become Nokia's insurance. Should this marriage with Microsoft fell through, they would still have something to sell and keep the door open.
So, 3 million Lumia handsets to date then? Thats like a weekend launch for Apple.
The numbers for the Lumia were 2 million in the first quarter of 2012. Apple in fact sold OVER 4 million iPhone 4s' in its first weekend!!! MSFT is irrelevant in the mobile space and that's not about to change anytime soon. Sorry Nokia but you bet on the wrong horse. Although they paid you to race, you're stuck with a nag.
LOL - it looks like the anodized aluminum iPod from several years ago. Very innovative!!!!
It does bare a certain resemblance in the colored versions on the rounded sides but that's where it ends. You can say they might have been inspired by it as a starting point but there are so many unique and original aspects to it that it's a copy internally or externally.
The numbers for the Lumia were 2 million in the first quarter of 2012. Apple in fact sold OVER 4 million iPhone 4s' in its first weekend!!! MSFT is irrelevant in the mobile space and that's not about to change anytime soon. Sorry Nokia but you bet on the wrong horse. Although they paid you to race, you're stuck with a nag.
As I've stated before MS can refine WinPh indefinitely until they find an in. Nokia is the one that has a limited life expectancy if they can't find a profitable revenue stream. That said, RiM is less than half that value of Nokia (which includes their huge drop in the market today).
Of course that was coming from 'market analysts' (who are always awesome!) and Windows fanboys, but pointing out that there was no reason to think that users would hang around and jump from Symbian to Windows was too much logic, apparently. If you have to change platforms anyway, why on earth would it be assumed it would be to Windows? Just because Nokia made the hardware? Still a really f*(&&*ing strange assumption.
Every time I see their ads on TV I get the impression that they are referring to their past (and current) smartphones when they say beta testing.
You must be joking! Do they really air those horrid fugly adds?
No wonder they are collapsing.
Sorry Nokia but you bet on the wrong horse. Although they paid you to race, you're stuck with a nag.
What would have been the right horse for Nokia to bet on?
Now, I am wondering why a momentum going Down Hill can be such an attractive investment
From 25 million to 2 million smartphones sold per quarter. MeeGo on the N9 was getting great reviews and Elop crushed it for this. Such a sad state of affairs.
The entire industry can not seem to figure out how to compete, and they will not as long as the see themselves as cell phone company verse a consumer electronic company selling a product that meets the consumer needs not what the Service provide think is needed.
Face it where can you sight another example of one company almost single handedly wiping out most of the competitors. Apple as taken down RIM, Nokia, and HTC, they would have taken out Samsung but they copy better than Microsoft does. Motorola had issue prior to apple coming onto the horizon.
The entire industry can not seem to figure out how to compete, and they will not as long as the see themselves as cell phone company verse a consumer electronic company selling a product that meets the consumer needs not what the Service provide think is needed.
There is a lot right about this, but we should not ignore that Nokia was still outselling Apple in smartphones, and overall profitable when Elop came in. The N9 was maybe the most-praised version one mobile phone since the original iPhone, but Elop ordered to only sell it in markets that are (on a global scale) largely irrelevant to maintain his cozy position: ankle-deep and head-first in Ballmer's behind.
Interesting that both Nokia and RIM are falling on hard times, and yet RIM gets far more hate and piling on.
Do you have an argument to back up that claim? This thread is pooh poohing Nokia quite a bit but I see no pooh poohing of RiM.
Elop isn't particularly popular in Finland right now.
From 25 million to 2 million smartphones sold per quarter. MeeGo on the N9 was getting great reviews and Elop crushed it for this. Such a sad state of affairs.
Not completely. I say some of Nokia men went behind Elop's back and now N9 is available in most GSM country that Nokia sell their own handsets without subsidiary. And yes, it won glowing reviews in those places.
When App store takes a back seat, be it content issues, dodgy credit card system, or lacks of established online payment, where phones have to fight mostly with what comes out of the box, Nokia holds firm. Perhaps like Samsung in China, if Apple cannot dislodge Samsung out of Mainland China and Nokia from India, they will come back and bite Apple later.
So if iPhone is a BMW, Nokia could be our Toyota Land Cruiser; roam free where iPhone cannot follow.
And for RichL, if iPhone is like your BMW 3-Series, would you call Samsung Galaxy a Ford Mondeo? Both are common, practical and available in almost any shape, size and price range.