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Nokia promises more cuts after disappointing Q1

Thursday, Apr 19, 2012 - 02:33

April 19 - Nokia ditched its sales chief and promised to slash more costs, as the struggling Finnish cellphone maker runs out of time to reinvent itself under pressure from smartphone rivals. Matt Cowan reports.

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Just over a week after issuing a profit warning that sent its stock to its lowest level in 15 years, the Finnish mobile handset manufacturer Nokia is promising further cost cuts to deal with what CEO Stephen Elop labelled 'greater than expected competitive challenges'. Nokia reported a slightly larger than expected loss for the first quarter, at 8 euro cents per share - one cent higher than analyst had been predicting. Elop said sales results for its new Lumia phones had been mixed, exceeding expectations in the U.S. but slow to pick up momentum in certain markets including the UK. Nokia switched from developing its own Symbian mobile operating system to form a strategic partnership with Microsoft to use its Windows Phone software in February of 2011. Ian Fogg is the head of mobile at IHS Screen Digest. SOUNDBITE: Ian Fogg, IHS Screen Digest Mobile Analyst saying (English) "It's on the brink of failure because they told two million handsets in the first quarter of 2012 despite being available on all the leading European carriers as well as some carriers in Asia and T-Mobile in the U.S. So with wide distribution, they sold just two million handsets. They also sold at an ASP, an average selling price, that was very significantly below the list price of two handsets available for that period. They're struggling to sell in the market. The carriers report little consumer interest. They report that it doesn't have enough differentiation from the competition and it doesn't have enough marketing money behind it. It's not selling well enough. By comparison, in the last quarter of 2011, Apple shipped 37 million iPhones." And he says, a lack of momentum in the market does not bode well for the future either. SOUNDBITE: Ian Fogg, IHS Screen Digest Mobile Analyst saying (English) "For a smartphone to be a success, it needs enormous scale. It needs tens of millions of handsets to be sold. Without that, app developers won't create the apps. Without the apps, the platform doesn't fulfill the promise of being a smartphone and at the moment they're not selling enough handsets to meet that promise." The head of research at CCS Insight echoed that sentiment, saying there needs to be a meaningful turnaround in the second half of the year, or serious questions will be asked. SOUNDBITE: Matt Cowan, Reuters Technology Correspondent saying (English): "Last week's profit warning sparked a downgrade of Nokia's debt by the credit ratings agency Moody's following a similar move by Standard and Poor's last month. While few are ready to write off Nokia just yet, it's time to orchestrate a turnaround is running short. Matt Cowan, Reuters."

Nokia promises more cuts after disappointing Q1

Thursday, Apr 19, 2012 - 02:33

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