Nokia lowers Devices & Services first quarter 2012 outlook and provides second quarter 2012 outlook
Difficult financial performance reflects company in transition
Positive early momentum in Lumia smartphone strategy
Nokia Corporation
Stock exchange release
April 11, 2012 at 15.00 (CET+1)
Espoo, Finland - Nokia today provided preliminary information on certain aspects
of its first quarter 2012 financial performance, including a lowered first
quarter 2012 outlook for Devices & Services. During the first quarter 2012,
multiple factors negatively affected Nokia´s Devices & Services business to a
greater extent than previously expected. These factors included:
- Competitive industry dynamics, which negatively affected net sales in the
Mobile Phones and Smart Devices business units, particularly in India, the
Middle East and Africa and China; and
- Gross margin declines, particularly in the Smart Devices business unit.
The impact of these factors on the non-IFRS Devices & Services operating margin
in the first quarter 2012 was partially offset by a significant benefit from
lower warranty costs.
Updated outlook for Devices & Services for the first quarter 2012:
Nokia currently estimates that its non-IFRS Devices & Services operating margin
in the first quarter 2012 was approximately negative 3 percent, compared to the
previously expected range of "around breakeven, ranging either above or below by
approximately 2 percentage points" primarily due to the factors noted above.
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Outlook for Devices & Services for the second quarter 2012:
Nokia expects its non-IFRS Devices & Services operating margin in the second
quarter 2012 to be similar to or below the first quarter 2012 level. This
outlook reflects that the first quarter 2012 benefit related to lower warranty
costs is expected to be non-recurring, as well as expectations regarding a
number of factors including:
- competitive industry dynamics continuing to negatively affect the Smart
Devices and Mobile Phones business units;
- timing, ramp-up, and consumer demand related to new products; and
- the macroeconomic environment.
"Our disappointing Devices & Services first quarter 2012 financial results and
outlook for the second quarter 2012 illustrates that our Devices & Services
business continues to be in the midst of transition, " said Stephen Elop,
President and CEO of Nokia. "Within our Smart Devices business unit, we have
established early momentum with Lumia, and we are increasing our investments in
Lumia to achieve market success. Our operator and distributor partners are
providing solid support for Windows Phone as a third ecosystem, as evidenced
most recently by the launch of the Lumia 900 by AT&T in the United States."