Nokia cuts sales outlook due to market forces

Stronger competition and shift toward lower-margin products prompt handset maker to trim sales outlook for second quarter and full year.

Lance Whitney Contributing Writer
Lance Whitney is a freelance technology writer and trainer and a former IT professional. He's written for Time, CNET, PCMag, and several other publications. He's the author of two tech books--one on Windows and another on LinkedIn.
Lance Whitney
2 min read

Nokia expects market conditions to impact its annual and second-quarter financial results, forcing the company to trim its sales outlook.

The handset maker said Wednesday it now anticipates second-quarter sales for its mobile devices and services division will be at the lower end of, or slightly below, its previous forecast of 6.7 billion euros to 7.2 billion euros ($8.2 billion to $8.8 billion). Samsung attributed the revised forecast to lower-than-expected average selling prices and volumes for its mobile phones.

Operating margins for the second quarter will also be at the low end of, or below, the previous forecast of 9 percent to 12 percent, which Nokia blamed on gross margins that were lower than expected.

For the full year, the Finland-based company said it continues to believe that mobile device volumes for the overall industry will rise 10 percent. But it expects its own mobile device value market share will be slightly lower this year compared with 2009--the company had previously forecast an increase. Additionally, operating margins for fiscal 2010 will be at the low end of, or below, the prior forecast of 11 percent to 13 percent.

Nokia is attributing the lower projections to a range of factors, including tougher competition in the high-end market, shifts toward lower-margin products, and the effects of the depreciation of the euro on its expenses and pricing.

After surviving a rough 2009, Nokia has been battling to improve earnings and sales. But the company continues to be hit hard by competition from the Apple iPhone, Android-based smartphones, and BlackBerry devices, forcing it to cut prices, which has pulled down both profits and market share.

Nokia is also facing more heat on the low-end market from competitors such as Samsung, said The Wall Street Journal, and is likely to face a few difficult quarters, according to one analyst quoted.