Nokia is forced to lower its financial targets for the first half of the year. The reason attributed is tough competition and poor sales.
Stephen Elop, the CEO of Nokia, is distressed that the plan of the company is getting upset. If things go worse he will be forced to take drastic measures including lowering the salary and even more job cuts. In fact, about 4,000 personnel were shown the door in the month of February.
Nokia is supposed to publish its financial results for the first quarter on April 19th. But the company said that the operating margin will be ‘minus 3%’. The main reason for this is the poor sales in the Middle East, China and India and also parts of Africa.
Its prediction for the second quarter was even gloomier. The operating margin is likely to be even worse compared to the first quarter. Even the advantage of the lower warranty cost of the first quarter will be lost. Another reason is the consumer demand for more sophisticated products. The macro economic condition also adds to the worries.
Nokia had sold more than two million Lumia devices during the first quarter at an average price of € 220 during the quarter. Its operating system, Windows Phone has not less than 80,000 applications.
Nokia will do everything to increase its production output. It is about to launch a Lumia 610 with Orange. It will be NFC enabled.
In any case, Elop does not lose hope. He says that the devices and services business is in the middle of transition. The company wants to concentrate on Lumia, which will definitely turn the table in the company’s favour, leading to success in the market. The company gets solid support from the network service providers and the product distributors.
Nokia expects net sales of € 4.2 billion in the quarter inclusive of the mobile phone sales of € 2.3 billion and smartphone sales of €1.7 billion.
Gross margin is expected to be 25% for the devices and services business.
