Nokia sales drop rekindles fears

Results renewed pressure on chief executive who made controversial decision to switch to Microsoft’s untried Windows Phone software

Shipments of Nokia mobile phones slumped 21 per cent to 55.8 million units, a far steeper decline than the 8 per cent fall that markets expected, with unit sales down in every region. Photograph: Dave Thompson/PA Wire

Shipments of Nokia mobile phones slumped 21 per cent to 55.8 million units, a far steeper decline than the 8 per cent fall that markets expected, with unit sales down in every region. Photograph: Dave Thompson/PA Wire

 

A sharp fall in sales of Nokia’s basic phones overshadowed a stronger performance from its Lumia smartphones in the first quarter, rekindling fears over its future and sending its shares tumbling to year lows.

The results renewed pressure on chief executive Stephen Elop, who was hired in 2010 to turn the Finnish mobile phone maker around after it fell behind rivals Samsung and Apple in the smartphone race.

He made the controversial decision to switch to Microsoft’s untried Windows Phone software in early 2011 and had said the transition would take two years, a period that’s now over. Analysts said he was running out of time.

Nokia said it sold 5.6 million units of Lumia handsets in the first quarter, up from 4.4 million in the previous quarter, and forecast stronger growth in the current quarter.

But shipments of mobile phones slumped 21 per cent to 55.8 million units, a far steeper decline than the 8 per cent fall that markets expected, with unit sales down in every region.

As a result, overall net sales fell 20 per cent to €5.9 billion from a year earlier, far short of the €6.5 billion forecast by analysts in a Reuters poll.

Nokia’s future is seen depending on higher-margin smartphones as a growing number of global consumers want access to apps such as Twitter from their handsets.

But it still sells more regular mobile phones than smartphones, and needs to protect its position in the basic handset market so buyers of its cheaper handsets don’t defect to other brands when they eventually upgrade to smartphones.

In markets such as China, Nokia faces strong competition not only from rivals such as Samsung but also from emerging cut-price competitors.

Elop told reporters that the main reason for the fall in mobile phone sales was tougher competition and the company would fight back by launching more innovative, cheaper products. – (Reuters )