Nokia shares tumble after loss forecast
By Tarmo Virki
HELSINKI (Reuters) - Nokia warned its phone business would post losses in the first two quarters of this year as it struggles to revamp its product line to compete with Apple and Samsung, sending its shares 19 percent lower.
Earlier on Wednesday, the struggling firm said it had found a software bug in the new Lumia 900 smartphone, its big hope to take on Apple's iPhone, and was effectively giving the model away until it is fixed.
Nokia shares fell as low as 3.10 euros, their lowest level since 1997. The stock had already crashed more than 50 percent since Nokia announced in February 2011 it was dropping its own Symbian operating software and switching to the largely untried Windows Phone system developed by Microsoft.
Nokia said its phone business, which is launching a raft of new products running Windows Phone to make up for the decline of the Symbian lines, would make an operating loss of around 3 percent of sales in the first quarter, having earlier forecast around breakeven. It predicted a similar or larger loss in the second quarter, below all 29 analysts' forecasts gathered by Reuters.
On average, analysts had expected a profit margin of 0.4 percent for the first quarter, and 2.1 percent for the second.
"It's a disaster," said Thomas Langer at WestLB. "Shipments of Symbian devices are declining faster than we anticipated ... (and) the ramp up of Lumia devices is not fast enough to compensate for the shortfall."
"Nokia's challenges have been exacerbated by rampant competition - notably Apple and Samsung, who are extracting a disproportionate amount of margin from the industry at present," said Ben Wood at CCS Insight.
Nokia said competition was particularly tight in the emerging markets of India, the Middle East, Africa and China, which have been an area of strength for the company, even as it suffered in more developed markets. Continued...