Nokia slashes sales outlook citing iPhone competition, stock plummets

Nokia today commented on factors impacting its business and updated its second quarter and full year 2010 outlook for Devices & Services. During the second quarter 2010, multiple factors are negatively impacting Nokia’s business to a greater extent than previously expected. These factors include: the competitive environment, particularly at the high-end of the market, and shifts in product mix towards somewhat lower gross margin products. In addition, the recent depreciation of the Euro affects Nokia’s cost of goods sold, operating expenses and global pricing tactics.

Updated outlook for Devices & Services for the second quarter 2010:
– Nokia now expects Devices & Services net sales to be at the lower end of, or slightly below, its previously expected range of EUR 6.7 billion to EUR 7.2 billion for the second quarter 2010. This update is primarily due to lower than previously expected average selling prices and mobile device volumes.
– Nokia now expects Devices & Services non-IFRS operating margin to be at the lower end of, or slightly below, its previously expected range of 9% to 12% for the second quarter 2010. This update is primarily due to a lower than previously expected gross margin.

Updated outlook for Devices & Services and mobile device market for the full year 2010:
– Nokia continues to expect industry mobile device volumes to be up approximately 10% in 2010, compared to 2009 (based on its revised definition of the industry mobile device market applicable beginning in 2010).
– Nokia continues to target its mobile device volume market share to be flat in 2010, compared to 2009.
– Nokia now expects its mobile device value market share to be slightly lower in 2010, compared to 2009. This update is primarily due to the competitive situation at the high-end of the market and shifts in product mix. This is an update to our previous target to increase our mobile device value market share slightly in 2010, compared to 2009.
– Nokia continues to target non-IFRS operating expenses in Devices & Services of approximately EUR 5.7 billion in 2010.
– Nokia now expects Devices & Services non-IFRS operating margin to be at the lower end of, or below, its previously targeted range of 11% to 13% for the full year 2010. This update is primarily due to the currently estimated gross margin, which is lower than previously estimated. Nokia expects Devices & Services non-IFRS operating margin during the fourth quarter 2010 to be higher than the currently expected full year Devices & Services non-IFRS operating margin.

Nokia will provide its second quarter results and more details on its 2010 full year outlook when it reports its Q2 2010 results on July 22, 2010.

Source: Nokia.

MacDailyNews Take: Jokia. The only surprises are that they didn’t promise yet another iPhone killer and rearrange the deck chairs once again.

MacDailyNews Note: On the news, shares of Nokia Oyj (NOK1V.HE) dropped 9.34%, or €-0.74 (-9.34%) to stand at €7.18:

19 Comments

  1. The last Nokia I owned was about 4 years ago. I wanted to Sync my contacts to my Mac using iSync, but I didn’t have the correct firmware on the phone, and after a looong search on Google I realised I needed to take it to a Nokia store to upgrade… so I visited the Nokia shop, and was charged £19.99 to upgrade to the latest firmware.

    Their phones are, in a word, crap. Our Sales team have Nokia phones, which are all being upgraded to iPhone 4s in July when our contracts are up for renewal.

    Bye bye Nokia.

  2. Nokia recognizes the Jony Ive’s latest iPhone 4 design is a Nokia killer – it will be irresistible to Europeans and suddenly makes Nokia design seem quaint and dated.

    It will do for Apple’s brand in Europe what the iconic electric shaver did for Braun in America in the 1970’s when all the sudden every dad had to have one and braun came into American households.

  3. Can’t imagine how Nokia execs were surprised by these developments. I thought their strategy was to give up on the high-end of the market and sell cheap phones in high volume. (A very, very bad strategy to be sure).

  4. The Nokia Nl8, Sorry “N Late, Ouch N8 is Doomed to Suffer the N97’s Fate, and there is nothing Nokia can do About it.
    Just as Motorola Fell asleep, at the Switch when Nokia Came into Existence, The same is now true that Nokia Fell asleep and Apple is now King.

    “Nokia was the Past & Apple is the Future”

    iPhone 4 Baby !!!!

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