tech history

Nokia Q1 results meet expectations, sees weaker Q2

Nokia reported first-quarter sales up 9 percent to EUR 10.4 billion, while operating profit fell 10 percent to EUR 439 million. EPS was unchanged versus a year earlier to EUR 0.09. The company's main division Devices and Services reported revenues of EUR 7.09 billion, up 6 percent from a year earlier and in line with the company's guidance of EUR 6.8-7.3 billion. The adjusted operating profit at the division fell 14 percent to EUR 694 million, but the margin came in at 9.8 percent, at the top end of the forecast range of 7-10 percent. Nokia CEO Stephen Elop said the company had started work on its new strategy in the quarter, including signing a definitive agreement and starting product and design work under the smartphone cooperation deal with Microsoft. He forecast a "more challenging" second quarter for Nokia, with Devices & Services sales estimated at EUR 6.1-6.6 billion and a margin of 6-9 percent. Sales are forecast at a similar level in Q3 but should see a seasonal increase in Q4. For the full year, Nokia forecast an adjusted operating margin for the division of 6-9 percent. The company noted that shortages of certain components will continue to impact mobile device volumes at least through the second and third quarters of 2011. In Q1, Nokia shipped 108.5 million phones, up 1 percent year-on-year and down 12 percent sequentially. Smartphone sales were up 13 percent from a year earlier but down 14 percent from Q4, to 24.2 million units. The average selling price was EUR 65 per phone in Q1, up from EUR 62 in Q1 2010 but down from EUR 69 in Q4 2010. Sales from services such as the Ovi Store rose to EUR 211 million in Q1, up 43 percent year-on-year and 5 percent sequentially. Nokia estimates the overall industry shipped 374 million phones in Q1, representing an increase of 16 percent year-on-year and a decrease of 7 percent sequentially. Based on this, its own market share fell to 29 percent in Q1, from 21 percent in Q4 and 33 percent in the first quarter of 2010. Out of an estimated 92.3 million smartphones sold worldwide in Q1, Nokia's share was 26 percent, down from 31 percent in Q4 and 41 percent a year earlier. Asia-Pacific was the company's biggest market in Q1, with shipments there down 7 percent year-on-year to 27.3 million units. Europe fell 2 percent to 23.4 million phones, Africa and the Middle East was unchanged at 22.2 million, and North America dropped 56 percent to 1.2 million. Latin America had the strongest growth, up 21 percent to 10.5 million units, and China grew 13 percent to 23.9 million.