27th Apr 11
Nokia market share drops but Microsoft deal confirmed
by Katie Naylor
Nokia news: profits out as deal secured
Nokia news: profits out as deal secured
Mobile phone producer Nokia has posted higher-than-expected profits over the opening three months of the year, a fall of one per cent to 344m euros (£304m).
However, its market share dropped four per cent to 29 per cent as cheaper competitors and the popularity of rivals’ smartphones chipped away at Nokia’s dominance. Nokia also confirmed that it had reached a long-awaited agreement with Microsoft to develop smartphone technology.
Investors welcomed the news, which sent shares in the company up nearly three per cent. Chief Executive Stephen Elop said that in the first quarter the company shifted from defining their strategy to executing their strategy.
He stated that on that front, he was pleased to reveal that they had signed a definitive deal with Microsoft and that their engineering work and product design was already underway.
The slow response by the Finnish company to the smartphone threat from Blackberry handsets and Apple’s iPhone has been one of the major concerns of the investors. Last Wednesday Apple announced a 95 per cent increase in profits over the first quarter and said a record 18.65 million iPhones had been sold over the three months. Consultants Strategy Analytics stated that Apple had overtaken Nokia as the largest handset seller in the world in terms of revenue.
Despite selling over 108.5 million handsets over the last quarter – nearly six times the amount which Apple sold – Strategy claims that the US company’s revenues from their more expensive phones surpassed its Finnish rival’s by some margin.
Strategy published a report on Thursday which estimated that wholesale revenues for Apple’s iPhone division were $11.9bn (£7bn, 8bn euros) during the first quarter, compared to $9.4bn for Nokia.
Nokia, under the Microsoft deal, will begin using the US firm’s software on its smartphones rather than its Symbian platform. Nokia claimed the agreement will enable it to slash annual costs by roughly one billion euros. Nokia’s group sales increased by nine per cent to 10.4bn euros, while sales of smartphones climbed six per cent to seven billion euros.
Nokia’s key phone unit announced a 9.8 per cent operating profit margin for the first quarter, way ahead of analysts’ predictions of 8.6 per cent. However, the company said that margins for the full year would drop to within a range of six per cent to nine per cent.
CCS Insight analyst Geoff Blaber said that finalisation of the Microsoft deal means that Nokia is now able to focus on execution; however, margin guidance confirms that difficult times are ahead as it changes the portfolio.
Despite the fall in Nokia’s market share, Sami Sarkamies, an analyst Nordea said that the first quarter had been very strong and much better than anticipated. He added that it appears that the situation is in control and that there had been no significant changes.
Our Stories
- Sandwich labels misleading shoppers
- Unemployment drops unexpectedly but worse still to come
- Tesco store managers see annual bonuses cut
- Royal Mail: half London sorting office to be sold
- Panasonic announces £3.4bn loss
- Thomas Cook attacks government over holidays at home promotion
- Clinton Cards falls into administration
- Wet April sees high street spending fall
- Five tough years ahead for UK jobs market
- Deal struck to save Thomas Cook
- Discount battle leads to sales decline at Morrisons
- Wetherspoon founder: pubs plans to be hit by taxes
Popular Topics
afghanistan al qaeda amazon Apple ASDA bank of england barack obama BBC british airways china david cameron Debenhams Egypt facebook george osborne Google India ipad iphone ivory coast japan Libya London M&S Marks & Spencer Morrisons nhs North Korea Office for National Statistics pakistan protests russia Sainsbury’s South Korea terrorism Tesco Tunisia UK UK retailers UK retail news UK shopping us Waitrose Wikileaks x factorArchive
- May 2012
- April 2012
- March 2012
- February 2012
- January 2012
- December 2011
- November 2011
- October 2011
- September 2011
- August 2011
- July 2011
- June 2011
- May 2011
- April 2011
- March 2011
- February 2011
- January 2011
- December 2010
- November 2010
- October 2010
- September 2010
- August 2010
- July 2010
- June 2010
- May 2010
- April 2010
- March 2010
- February 2010
- January 2010
- December 2009
- November 2009
- October 2009
- September 2009
- August 2009
- July 2009
- June 2009
- May 2009
- April 2009
- March 2009
- January 2009
