Nokia expecting big loss in Q1

(Associated Press Via Acquire Media NewsEdge) HELSINKI -- Following a profit warning last week, Nokia Corp. is poised to announce a big first-quarter loss on Thursday alongside a sharp decline in sales and a further fall in market share.

OVERVIEW: Last year, Nokia was still the world's top cellphone maker with annual unit sales of some 419 million devices, according to Strategy Analytics. However, that was down from 453 million in 2010. In the last quarter of 2011 it posted a net loss of (EURO)1.07 billion ($1.38 billion), a marked reverse from the 745 million profit a year earlier, as sales slumped 21 percent with smartphone sales plunging 23 percent.

The Finnish company, which teamed up with Microsoft Corp. last year, has faced stiff competition in the smartphones market. It has been overtaken by Apple Inc.'s iPhone in volume sales and revenue. Samsung Electronics Co., which uses the popular Android software, has also eaten away at the company's sales. Nokia has also suffered in the low end market, particularly against Asian manufacturers making cheaper phones, such as ZTE.

BY THE NUMBERS: Nokia warned last week that first-quarter operating margins would be negative and worse than previously estimated. The warning came as the company continued to suffer sales declines. It sold 83 million mobile devices in the period, down from 108 million in 2011, as smartphone sales halved to 12 million units. Expected revenue in the quarter for devices and services was (EURO)4.2 billion, down from (EURO)7 billion in 2011.

WHAT'S AHEAD: Nokia has been the leading handset maker since 1998 but after reaching a global goal of 40 percent market share in 2008, the company's share shrank to 29 percent in 2011 _ it's lowest level in 20 years.

Nokia is hoping to remedy the slide with its new Windows Phone 7, which launched in October, eight months after Nokia CEO Stephen Elop announced a partnership with the U.S. software giant. Nokia said it would adopt the Windows operating system in its new phones, phasing out the MeeGo and Symbian platforms, which are considered clumsy by many operators.

The company said it would not provide annual targets for 2012 since it was in a "year of transition." Last week, Elop described the first-quarter as "disappointing," but said Nokia had sold more than 2 million Windows-based Lumia phones in the period with "sequential growth" since they went on sale in November.

In 2011, Nokia announced more than 10,000 layoffs in a move aimed at cutting operating expenses by (EURO)1 billion by 2013 and has not ruled out more cutbacks.

ANALYST TAKE: Neil Mawston from Strategy Analytics said that "things were not looking good" for Nokia, as it grapples with its transition year with Microsoft.

"It's clearly on a knife edge and things are very tough, but it can either swing one way or the other," Mawston said. "The emphasis is definitely towards the downside at the moment but I think it's only fair to give Nokia at least a year before making any firm judgment on whether it's been a success or flop." STOCK PERFORMANCE: Nokia stock has fallen by half since Elop announced the deal with Microsoft. It dropped below (EURO)3.00 to a 15-year low of (EURO)2.98 on Monday after Moody's ratings agency downgraded Nokia's debt grade to near junk status, citing a sharp decline in first-quarter cellphone sales.

On Tuesday, Nokia's share price was up 2 percent at (EURO)3.06 ($3.99) in late afternoon trading in Helsinki.

____ Online: Nokia: http://www.nokia.com.

(c) 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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