Ina Fried

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Nokia Warns on Q1, Q2 Earnings Amid Rough Transition

Nokia on Wednesday warned that last quarter’s earnings will be lower than expected, and said that the current quarter’s business should be only about where things were in the first quarter.

The company said it expected negative margins of 2 to 3 percent for its devices and services business, as compared to its earlier expectation of roughly break-even results.

“Our disappointing Devices & Services first quarter 2012 financial results and outlook for the second quarter 2012 illustrates that our Devices & Services business continues to be in the midst of transition,” CEO Stephen Elop said in a statement.

Nokia cautioned that it will take “tactical price actions” in its low-end phone business, and also warned that further painful moves could be on the horizon.

The Finnish company said it “will accelerate planned cost reductions and will pursue additional significant structural actions if and when necessary.”

“We are continuing to increase the clock speed of the company,” Elop said. “The change is tangible, and we are proud of the way Nokia employees are quickly responding to the needs of consumers and partners.”

Elop tried to paint as good a picture as possible of things.

“Within our Smart Devices business unit, we have established early momentum with Lumia, and we are increasing our investments in Lumia to achieve market success,” Elop said. “Our operator and distributor partners are providing solid support for Windows Phone as a third ecosystem, as evidenced most recently by the launch of the Lumia 900 by AT&T in the United States.”

Of course, even there, things have been bumpy. Nokia confirmed late Tuesday that a software glitch is causing some Lumia 900 customers to be unable to connect to the Internet. The company is rushing out a software fix and offering a $100 credit to all early Lumia 900 buyers.

Nokia said that it sold more than two million of its Lumia phones in the first quarter, at an average selling price of 220 euros. It added that the number of Lumia phones being activated has continued to grow each month, although that’s probably to be expected as the company brings its Windows Phone products to more markets.


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