Finland’s Nokia shaken by $1bn loss
Mobile phone manufacturer Nokia has suffered a $1.2billion net loss in the first three months of 2012. The Finland-based company cites tough competition in the smartphone market as the reason for one of its worst quarters ever.
The result, reported on Thursday, is a stark comparison to the profit of $452million in the first quarter of 2011. The results show that not only have smartphone sales declined, but mobile phone sales have as well.
Nokia has been the leading mobile handset maker since 1998, but after reaching the global goal of 40% market share in 2008, their numbers have steadily dwindled. Nokia had hoped to get back on top with its new Windows 7 Phone, launched in October 2011, after a partnership with Microsoft was announced. The attempt to reinvent the Nokia smartphone around Microsoft’s Windows software has been unsuccessful thus far, as sales have fallen dramatically.
Nokia CEO and President Stephen Elop stated the company has faced “greater than expected competitive challenges”. Nokia faced challenging markets, including the British market.
He is determined to accelerate cost-cutting efforts amid mixed responses to the new Lumia smartphones with Windows software.
“We exceeded expectations in markets including the United States but establishing momentum in certain markets has been challenging.”
Elop described the first-quarter as disappointing, but claimed Nokia had sold more than two million Windows-based Lumia phones.
Colin Giles, who has been head of global sales since January 2010, is leaving the company as it restructures the sales unit, according to a statement from Nokia.
Last year, Nokia was still the world’s top phone maker, with annual unit sales exceeding 400 million. However, sales slumped in the last quarter of 2011 and Nokia reported a net loss of $1.4billion as smartphone sales decreased by 23%.
Nokia’s stock value has halved since Elop announced the deal with Microsoft and earlier this week, shares plunged to a 15-year low after Moody’s downgraded the company’s ratings and questioned its ability to transition successfully from Symbian to Windows.