Nokia slashes outlook, shares sink
Nokia (NYSE:NOK) announced Tuesday it expects lower second quarter and full year sales than previously thought, causing the mobile phone maker's shares to plummet more than 14% on the New York Stock Exchange.
The Helsinki, Finland-based company said that intensified competition, market trends and a shift toward cheaper devices were factors impacting its slashed outlook.
Original net sales guidance for Nokia's devices and services business was in the range of EUR6.1 billion to EUR 6.6 billion. However, due to lower volumes and selling prices, the company now expects net sales to be "substantially below" its previously reported outlook.
Nokia also anticipates adjusted operating margins for its second quarter to be "much lower" than the prior guidance range of 6% to 9%, mainly due to low net sales, it said.
With warnings of limited visibility, the company said adjusted operating margins could be around break-even.
Nokia asked investors to ignore previously reported third and fourth quarter targets and full year expectations. Given the unexpected change in its second quarter outlook, the company felt it inappropriate to provide annual targets for 2011, it said.
"Strategy transitions are difficult. We recognize the need to deliver great mobile products, and therefore we must accelerate the pace of our transition," said president and CEO, Stephen Elop.
The company said it plans to continue to invest in its Symbian line up and has intensified its retail point-of-sale marketing, so as to address its disappointing second quarter results.
Nokia also reported that its first product with the Windows Phone operating system is expected to ship in the fourth quarter.
As of mid-afternoon Tuesday, Nokia was down 14.02%, trading at $7.05 per share.
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