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Nokia plunged after profit warning – thing not looking good for the Finnish giant

Wednesday, 11 April 2012
Shares in Nokia plunged 17 percent after the mobile phone giant surprised investors by saying it expected to make losses in the first half of 2012.

Telecom giant, Nokia's profit warning led shares to fall like a stone on the exchange. An hour and a half after CEO Stephen Elops warning, Nokia dropped by 17 percent and traded at 15-year low. "A disaster," says one analyst.

Strong competition has affected the net sales of mobile phones. India, Middle East, Africa and China are singled out as extraordinary troubled markets. While gross margins decrease.

According to various news sources Nokia expects that the operating margin in the second quarter in Devices & Services to be lower or in line with the first quarter. The operating margin for Q1 is expected to be negative and land at -3 percent.

The troubled business unit Devices & Services net sales is projected to be €4.2 billion for the first quarter. Mobile phones sales would reach €2.3 billion and smart devices for €1.7 billion.
The company's CEO Stephen Elop says according to news sources that the company is going through a tough "transformation process".

CFO Timo Ihamuotila says that it is primarily Symbian phones and not Lumia phones that are weighing on gross margin.
"Lumia figures are higher than 16 percent and Symbian are less than 16 percent, "he said according to media reports.

Stephen Elop wants now wants to increase the pace of getting the Lumia phones at a lower price segments. New models are promised in the second quarter.

Other reports such as that on technology site, Engadget says that, for a period the U.S. AT & T is giving customers a discount of $100 to the purchasers of a Lumia 900, which basically means that the phones are given away. Faulty softwares are reflected in the large discount.

Norkia’s biggest problem has been that it has been contented with its leading position as number one mobile phone producers and was too slow to react to changing times. Twice technological and customer changes have caught Nokia pants down. First the clap shell model which propelled the likes of Samsung to prominence and now the touch screen models or the smart phone models that are sweeping the market.

When did Nokia wake to the fact smart phones and tablets were the future? It was too late and mixing up with Microsoft just doesn’t make Nokia look futuristic.
By Team


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