Nokia's shares take beating following Q2 guidance cut

Nokia's (NYSE:NOK) shares continued to tumble as a wave of analysts downgraded their outlook on the company after Nokia warned of a slowdown in second-quarter profits and sales.

Nokia's shares were down around 7 percent in trading in Europe after falling 18 percent Tuesday to a 13-year low after the Finnish handset giant said sales for the second quarter would be "substantially below" its targets. On the New York Stock Exchange, Nokia's shares reached $6.55 per share, the company's lowest share price since 1998.

Analysts at Royal Bank of Scotland said Nokia is just starting to feel the effects of strong competition from Google's (NASDAQ:GOOG) Android platform in emerging markets, and Nokia could be hurt further by low-cost Android models. RBS, which cut its price target on Nokia, said it was not convinced that Nokia's embrace of Microsoft's (NASDAQ:MSFT) Windows Phone could help improve Nokia's gross margins.

Goldman Sachs also downgraded its rating on Nokia on worries that its loss of market share will hurt the company when it releases Windows Phone devices. Analysts at Nomura, J.P. Morgan and Credit Suisse also cut their price targets for Nokia. 

The handset maker on Tuesday said sales in the second quarter will fall below its previous guidance of $8.78 billion to $9.36 billion, though it did not give a new sales range. Additionally, Nokia said its operating margin for its devices unit will fall below the 6 percent to 9 percent range it had previously given, and said margins could be around breakeven. Nokia blamed a variety of factors on the cut in guidance, including the competitive dynamics, particularly in China and Europe, lower average selling prices in its product mix and pricing tactics by Nokia and its competitors.

To improve its position, Nokia said it would add new capabilities to its Symbian platform and intensify its focus on retail point-of-sales marketing. Additionally, the company said it expects to release its first Windows Phone device in the fourth quarter. Nokia has said it expects 2011 and 2012 to be transition years as it positions Windows Phone as its primary smartphone platform.

For more:
- see this Dow Jones Newswires article (sub. req.)
- see this Reuters article
- see this Bloomberg article

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