Nokia hit by falling sales and restructuring costs
NOKIA HAS allowed its sales chief to leave and promises to slash more costs as chief executive Stephen Elop battles to reinvent the mobile phone maker to compete with smartphone rivals.
The Finnish company, which is expected to be overtaken as the world’s biggest handset-maker by Samsung, swung to a net loss of €1.6 billion in the first quarter of the year, hit by falling sales and heavy restructuring charges.
Analysts say Mr Elop has until the end of the year to improve sales of new Lumia smartphones – Nokia’s main weapon in its fight against Apple and Samsung – before investors start to question his position.
Mr Elop launched Nokia’s turnaround plan in February 2011 by switching to Microsoft’s Windows operating system in a bid to make its phones more competitive against Apple’s iPhone and Samsung’s Galaxy. Since then its shares have crashed by two-thirds.
Last week Nokia said sales of the Windows-based Lumia phones fell far short of analysts’ estimates, raising fresh concerns. Nokia made a loss of 8 cents per share for the first quarter, below forecasts.
It warned last week of losses in the first two quarters of the year.
“Clearly we are disappointed by our performance in the first quarter,” Mr Elop said yesterday.
Nokia said Colin Giles, head of sales, would leave the firm in June for personal reasons as it restructures the sales team.
Nokia’s first-quarter mobile phone sales have fallen 24 per cent from a year ago.
China-based Mr Giles had worked at Nokia since 1992 and played a key role in building the company’s business in Asia – a region where it now faces tough competition from lower-priced rivals. Sales in China fell 70 per cent in the first quarter from a year earlier.
Nokia said it would announce details of extra cost-cuts soon.
Some analysts say the shares are extremely undervalued, taking into account nearly €5 billion of cash and its large patent portfolio.
“Nokia’s patent portfolio’s value is probably over €5 billion. Nokia’s current valuation is basically patents plus net cash position,” said Nordea analyst Sami Sarkamies.
Others said Nokia’s management was not getting enough credit for changes made in the past year. – (Reuters)