No real surprise here as Nokia lowers 2011 outlook figures

No real surprise here as Nokia lowers 2011 outlook figuresToday, Nokia issued a press release lowering the Devices & Services 2nd quarter 2011 outlook and updates for the full year 2011 outlook. This really is not surprising news after they announced future support of Windows Phone on their smartphones, but I am a bit surprised by the statement that “This update is primarily due to lower than previously expected average selling prices.” Really? The prices of high end smartphones dropped over a year ago and has held fairly steady so why is this unexpected?

Nokia expected net sales to be in the range of EUR 6.1 to 6.6 billion, but stated it will now be substantially lower (the new expectation was not revealed). They also stated it is no longer appropriate for them to provide annual targets and given the uncertainty with Windows Phone and MeeGo this is probably a good strategy.

The press release states that Nokia is taking immediate action to address the issues that are impacting its Devices & Services business and these include:

  • Nokia is continuing to invest to bring new innovative capabilities to its Symbian line up. In addition, Nokia has taken price actions on its current smartphone portfolio, and Nokia is intensifying its focus on retail point-of-sales marketing.
  • Nokia started shipping its new dual-SIM devices last week.
  • Nokia remains pleased with its progress on its Windows Phone strategy, and has increased confidence that the first Nokia product with Windows Phone will ship in the fourth quarter 2011.
  • Nokia remains committed to its target to reduce its Devices & Services non-IFRS operating expenses by EUR 1 billion for the full year 2013, compared to the full year 2010, and plans to implement these reductions as quickly and effectively as possible.
  • After the transition, Nokia continues to target Devices & Services net sales to grow faster than the market and Devices & Services non-IFRS operating margin to be 10% or more.

They are confident they will release a Windows Phone-powered Nokia device prior to the end of 2011 and IMHO they must do this in order keep people’s interest in their brand.

Nokia will provide its second quarter results and more details when it reports its Q2 2011 results on July 21, 2011.


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