John Paczkowski

Recent Posts by John Paczkowski

Another Tough Quarter for Nokia

Well, this certainly adds a bit of perspective to Nokia’s rebound story.

Reporting first-quarter earnings this morning, the world’s largest maker of mobile phones fell short of expectations for both sales and profit. Though sales rose for the first time since the second quarter of 2008, they did not meet consensus estimates. Where analysts were looking for 9.69 billion euros, Nokia (NOK) delivered just 9.52 billion. And at 14 cents a share, adjusted earnings missed a consensus forecast for earnings of 15 cents.

There was some good news amid the bad, though. Nokia sold 21.5 million smartphones during the quarter, up 57 percent. That’s quite an improvement over last quarter, though as growth rates go, it pales compared with the 131 percent jump in iPhone shipments Apple (AAPL) reported earlier this week.

In any event, Nokia’s struggle to return to its former glory in the highly competitive mobile market is far from over. Said CEO Olli-Pekka Kallasvuo: “We continue to face tough competition with respect to the high end of our mobile device portfolio, as well as challenging market conditions on the infrastructure side.”

That’s not going to change any time soon, particularly in the smartphone market, where Nokia lags far behind its rivals. As Gartner (IT) analyst Carolina Milanesi notes, “Everyone else has caught up and Nokia has been left behind.”

And while the company is doing its damnedest to catch up, things just don’t seem to be working out. Indeed, this morning, Nokia said it is delaying the launch of its first Symbian 3 devices from the second till the third quarter.

“We will not ship these products before the quality meets the end user’s needs and demands,” Kallasvuo said during the company’s earnings call. “It’s a painful thing to delay something a bit. I am aware of that. But at the same time meeting the quality requirements is the right thing to do.”

Disappointing news given that these are the handsets intended as rivals to Apple’s iPhone and to some of HTC’s Android devices. Pushing their launch date out is going to put the company under enormous pressure toward the end of the year as we head into the winter holidays.

Said Milanesi: “Nokia catching up becomes less hopeful because of these delays. Competition will only get tougher in the second half with the run up to Christmas. We have to see what kind of rabbit they can pull out of the hat.”

Wall Street’s reaction to today’s news? A nasty beating. As of this writing, Nokia shares are trading down nearly 13 percent at $12.86.


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