Shares of Nokia plummeted nearly 15 percent Wednesday morning as the Finnish OEM lowered its first-quarter 2012 outlook for Devices & Services.
Nokia lowered its non-IFRS Devices & Services operating margin in the first-quarter 2012 to negative 3 percent, compared to the previously expected range of “around breakeven,” with a range of above or below approximately 2 percentage points.
Nokia estimates that Devices & Services net sales in the first quarter of 012 were $5.5 billion, comprised of Mobile Phones net sales of $3.02 billion (71 million units), Smart Devices net sales of $2.23 billion (12 million units), and Devices & Services “Other” net sales of $263 million.
The company said it sold more than 2 million Lumia devices in the first quarter at an average selling price of approximately $289. The company says it has seen sequential growth in Lumia device activations every month since starting sales of Lumia devices in November 2011. Lumia has gained market share with both distribution partners and consumers. The Windows Phone ecosystem is also attracting developers and has expanded with more than 80,000 applications available.
Stephen Elop, president and CEO of Nokia, said in a statement that the company is clearly still in flux as it makes the switch to Microsoft’s Windows Phone operating system.
“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 wrote, adding that this past weekend’s launch of the Lumia 900 with AT&T in the United States points to strengthening operator and distributor partnerships.
And yet there was a bit of a hiccup this week as customers started getting their hands on the Lumia 900 from AT&T. Customers who purchased the device have reportedly been experiencing trouble with data connections. Nokia confirmed the problem and promises a fix by April 16.
As a result of the problem, however, Nokia is offering a $100 credit to those who purchased the device. The credit is available to anyone who purchases a Lumia 900 handset before April 21. AT&T currently offers the phone for $99 on a two-year contract.
Today’s news comes after Nokia in March outlined significant risks and a $1.8 billion loss for 2011 in a filing with the Securities and Exchange Commission (SEC). In its report to the SEC, Nokia said there were major risks inherent in its switch to Microsoft’s Windows Phone operating system.
Shares of the company were selling at $4.31, down 14.31 percent in early morning trading. Nokia’s announcement today was clearly aimed at preparing investors for the official announcement of its Q1 2012 financial results on April 19.
Filed Under: Devices
