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Nokia issues profits warning as smartphone sales halve

Nokia has warned investors that “earnings, margins and device sales” in its Devices & Services division will be lower than expected when its first quarter trading results are announced next week.

Nokia issued the profit warning and also revealed that it expects little improvement in the second quarter, with shares falling on the news.

Net sales for the Devices & Services division were estimated at €4.2bn, compared to €7.087bn in the same period of 2011 and €6.664bn in the first quarter of 2010.

Despite the apparent success of its Lumia smartphones, with a huge launch taking place of the Lumia 900 in the US last week, Nokia’s sales of smartphones actually halved.

In total it sold 12 million smartphones in Q1 2012, compared to 24.2 million in the same period in 2011. That included two million Lumia handsets, with Symbian still making up just under 10 million device sales.

The official announcement came with the sub-heading “Difficult financial performance reflects company in transition” and Stephen Elop, President and CEO of Nokia, echoed that in a statement.

“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,” Elop said.

The main issue seems to be a much larger drop in the number of sales of Symbian devices than was previously anticipated.

Symbian device sales fell by 58 per cent over the same period in the previous year and were 40 per cent lower than the final quarter 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. 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,” Elop added.

“We are continuing to increase the clock speed of the company. The change is tangible, and we are proud of the way Nokia employees are quickly responding to the needs of consumers and partners.”

Nokia will publish full first quarter results on 19 April 2012.

Nokia suffered more bad news with the announcement that some Lumia 900 handsets had data connection issues.

The company plans to offer a software update or handset exchange to fix the issue and also offered customers a $100 rebate.  


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