Shares of Nokia�(NOK) are down 75 cents, or 15%, at $4.28, steepening the sharp decline they experienced in early trading, after the company this morning cut its outlook for Q1, saying it would had a negative operating margin of 3% in its handset business in the three months ending in March, versus a prior expectation it might break even, and that things would be about the same or worse this quarter.
The company said a “number of factors” played into its outlook:
Competitive industry dynamics continuing to negatively affect the Smart Devices and Mobile Phones business units; timing, ramp-up, and consumer demand related to new products; and the macroeconomic environment.
Still, CEO Stephen Elop said the company was receiving some positive support for its new line of phones based on Microsoft’s (MSFT) “Windows Phone” operating system, including the “Lumia 900” that went on sale in the U.S. on Sunday.
Nokia said it sold “more than 2 million” Lumias at an average selling price of �220 in Q1. It also said it has “seen sequential growth in Lumia device activations every month” since Lumia first went on sale in November of last year.
The company plans to put more money into Lumia, said Elop, and to speed up its cost cutting, remarking, “We are continuing to increase the clock speed of the company.”
Update:�In a note to clients this morning, R.W. Baird’s William Power reiterates a Neutral rating, speculating that�Apple‘s (AAPL)�iPhone 4S�is in part responsible for the damage to handset sales:
The company shipped 12 million smartphones, below our 16.2 million forecast, and 71 million feature phones, below our 80.1 million forecast. The company cited macroeconomic weakness and tougher competitive dynamics, particularly in India, the Middle East, Africa, and China. We would note that the iPhone 4S launched in many of those markets in late Q4 and early Q1, though low end Android devices appear to be the biggest culprit.�
Nomura Equity Research’s Stuart Jeffrey also reiterates a Neutral rating, writing that a faster decline in Nokia’s older wares could actually be a good thing, in some sense:
We see a continued risk that Q2 proves weaker than even the new guidance implies. Moreover, unless new feature phone models are an instant hit, there is a risk that Q3 will see another leg down in earnings.�However, the smaller revenues from Symbian get, the lower the risk of further downside surprise. Moreover, anyone owning Nokia is probably doing so with a view to capitalising on the company�s Windows Phone turnaround. Faster-than-expected declines in Symbian may just bring forward the bad news and allow any potential Windows Phone-based recovery to have an undiluted impact on company earnings.
Fin
No comments:
Post a Comment