Nokia warns of losses in first and second quarters

Focus
It said it would continue to increase its focus on accelerating sales of its Lumia smartphones and cutting costs.
“During the first quarter of 2012, multiple factors negatively affected Nokia’s Devices & Services business to a greater extent than previously expected,” Nokia said in a statement.

These included gross margin declines, particularly in the Smart Devices business unit, the firm said.
As a result it now expects operating margin in the first quarter 2012 of “approximately negative three percent”, compared with the previously expected range of “around breakeven, ranging either above or below by approximately two percentage points”.

Margin
It expects operating margin in the second quarter “to be similar to or below the first quarter 2012 level”.
Last year, Nokia announced a strategic partnership with Microsoft that would see it move away from its Symbian operating system on its smartphones in favour of the

Windows operating system.
Nokia chief executive Stephen Elop said the business was in transition after a difficult first quarter.
Its Lumia 900 smartphone, which uses the Windows software, went on sale in the US on Sunday.

“We have established early momentum  with Lumia, and we are increasing our investments in Lumia to achieve market success,” Mr Elop           said.
Also yesterday, Nokia revealed a new version of the Lumia 610 with near field communication (NFC) technology, which allows users with similar technology to exchange data on their handsets and make payments.
Ben Wood from CCS Insight said the first half of the year was always going to be challenging for the company.

Challenges
“Nokia’s challenges have been exacerbated by rampant competition — notably from Apple and Samsung who are extracting a disproportionate amount of margin from the industry at present,” he said.

In February, Nokia announced the details of 4 000 job cuts, two weeks after posting a 1,08bn euro ($1,4 billion; £905 million) loss for the three months to the end of December 2011.

The company announced earlier that a software bug in the latest Nokia smartphone had caused some handsets in the US to occasionally lose their data connection.
The Finnish manufacturer offered customers $100 (£63) in call credits and said a fix for the Lumia 900’s “memory management issue” would be issued on 16 April.