Strong Lumia sales fail to salvage Nokia-Cell Phones For Less,-
A strong showing for Nokia's high-end Lumia range of smartphones failed to cover the loss incurred by poorly performing sales of its basic mobile devices in the first quarter, results released today revealed.
The Nokia Lumia 920 is currently
one of Windows Phone 8's flagship devices. Photo:
Reuters
The first quarter results put Nokia firmly behind its market rivals Apple and
Samsung, despite the company selling 5.6 million Lumia handsets, a 27 per cent
increase on the previous quarter.
The disappointing figures coincided with a Financial Times report that Nokia
was seeking to move into the "phablet" market, offering customers a
Nokia-stamped alternative to products like Samsung's popular Galaxy Note device,
which boasts a 5.3" screen and sells particularly well in Asia, where
phone/tablet hybrids are most used.
Lumia would be at the forefront of this change of direction, and a range of
devices would be planned in the phablet niche, reportedly with "more advanced
specifications" than those of the Samsung Galaxy Note.
Meanwhile, overall net sales fell 20 per cent to 5.9 billion euros from a
year earlier at Nokia, while phone volumes tumbled 30 per cent on the previous
quarter.
It forecast margins in its devices and services business would be
"approximately negative 2 per cent" in the second quarter, down from a weak 0.1
per cent in the first quarter.
"The shortfall is in the (cheaper) mobile phone side, where both volumes and
average selling prices came lower than expected. That is of course a bit
worrying, since that has been their bread and butter business in the Devices and
Services unit," Hakan Wranne, analyst at Swedbank, told Reuters.
"I think we will see the market's profit estimates for 2014 come down," he added.
Stephen Elop, Nokia's Chief Executive, said, "At the highest level, we are pleased that Nokia Group achieved underlying operating profitability for the third quarter in a row. While operating in a highly competitive environment, Nokia is executing our strategy with urgency and managing our costs very well. We have areas where we are making progress, and areas where we are further increasing the focus. For example, people are responding positively to the Lumia portfolio, and our volumes are increasing quarter over quarter. On the other hand, our Mobile Phones business faces a difficult competitive environment, and we are taking tactical actions and bringing new innovation to market to address our challenges."
"I think we will see the market's profit estimates for 2014 come down," he added.
Stephen Elop, Nokia's Chief Executive, said, "At the highest level, we are pleased that Nokia Group achieved underlying operating profitability for the third quarter in a row. While operating in a highly competitive environment, Nokia is executing our strategy with urgency and managing our costs very well. We have areas where we are making progress, and areas where we are further increasing the focus. For example, people are responding positively to the Lumia portfolio, and our volumes are increasing quarter over quarter. On the other hand, our Mobile Phones business faces a difficult competitive environment, and we are taking tactical actions and bringing new innovation to market to address our challenges."
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