Nokia cuts forecast again, blames competition

Nokia has downgraded its financial forecasts for the second time this year, admitting that Q2 sales could struggle to meet the lower end of its previous guidance.
 
The announcement on Wednesday sent its stock plummeting nearly 11% to $8.77 at the close, down $1.05, though it recovered 3 cents in after-hours trading.
 
Nokia said net sales could be lower than the €6.7-€7.2 billion ($8.2b-$9.9b) it previously predicted, while non-IFRS operating margin could struggle to reach the 9%-12% forecast for the quarter.
 
The announcement highlights Nokia’s inability to create a smartphone that can compete with the iPhone, or a new operating system that can rival Android, BlackBerry or the iPhone.
 
A “competitive environment, particularly at the high-end of the market, and shifts in product mix towards somewhat lower gross margin products” is impacting on sales the firm said.
 
Additionally, the weaker Euro had increased operating expenses.
 
 
The currency fluctuations also hit Nokia’s global pricing strategy, putting greater pressure on ASPs that were already lower due to that focus on mid-tier devices.
 
While the firm still aims to hold-steady in terms of full-year market share, it now predicts its share of the market by value will shrink.
 
Nokia appears to be focusing on keeping costs in check, aiming to keep full-year non-IFRS operating expenses at €5.7 billion.
 
Gavin Byrne, senior analyst at research firm Informa Telecoms & Media, believes the firm should focus on smartphones to stem the flow of sales.
 
But, to do that the firm needs “meaningful innovation that will at least match the user experience offered by its competitors,” he cautioned.
 
The vendor will release 2Q results on July 22.

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