Market Commentary and Intraday News
Nokia expected to slide further in Q3
215 days ago
By MATTI HUUHTANEN
(AP:HELSINKI) Nokia Corp. is expected on Thursday to report a plunge in sales and further loss of market share as investors await next week's launch of Microsoft's Windows Phone software 8, which the struggling company has called an "important catalyst" for its ailing smartphone devices.
The former top cellphone maker has lost out in the fierce top-end race to Apple and Samsung and is now also losing ground to Asian makers in lower-end devices. Samsung overtook it as the world's No. 1 cellphone maker in the first quarter, with 86.6 million units sold, compared with 83 million for Nokia, according to Gartner research firm. Nokia led the field for 14 years.
WHAT TO WATCH FOR: Investors will be looking to see if teaming up with Microsoft Corp. last year has helped reverse Nokia's slide and raise the company's profile in the U.S., where its presence has been weak. Nokia said the decline of its phones based on the old Symbian platform in the second quarter was "more than offset" by sales of the new Windows-based Lumia devices in North America. Nokia sold 4 million Lumia phones worldwide in the quarter _ double the amount in the first quarter.
OVERVIEW: Nokia's global market share has steadily shrunk from a peak of 40 percent in 2008 to 29 percent in 2011 and is expected to dwindle further this year. In the second quarter its net loss nearly quadrupled to (EURO)1.4 billion ($1.7 billion), with overall sales down 19 percent at (EURO)7.5 billion.
Facing stiff competition from Apple's iPhone, Samsung and devices running Google's popular Android software, Nokia has tried to stem the decline in smartphones by replacing the Symbian operating platform with Microsoft's Windows Phone software. A drop in sales was expected during the transition period and CEO Stephen Elop has said that the third quarter would "remain difficult" as the phase-out of Symbian phones continues.
THE BIG PICTURE: Nokia's decline is part of a general slump in Europe's mobile industry, where manufacturers are increasingly moving production plants to Asia. Nokia closed it last cellphone factory in Finland earlier this year and is planning to slash 10,000 jobs worldwide.
WHAT'S EXPECTED: Analyst Neil Mawston from London-based Strategy Analytics said he expects another loss in the quarter for Nokia ,with sales falling to some 83 million devices against market leader Samsung's 98 million. Nokia is expected to fare even worse in smartphones _ down to 8 million devices _ compared with iPhone's 27 million and Samsung's 55 million, Mawston said.
"The window of opportunity is still open but the gap is getting smaller. Nokia has to show some signs that the Windows Phone portfolio can assist more in its recovery," Mawston said. "We think things are a little bit rosier for Nokia than they were because its feature phones division is showing signs of recovery and their Microsoft phones are growing quarter on quarter."
LAST YEAR'S QUARTER: In the third quarter of 2011, Nokia reported a net loss of (EURO)68 million on revenues of (EURO)8.9 billion.
STOCK PERFORMANCE: Nokia stock has fallen to its lowest level since the 1990s, plunging below (EURO)2 in mid-June. On Tuesday, its shares closed up 9 percent at (EURO)2.17 ($2.83) in Helsinki.
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