Nokia reports weaker than expected first quarter results

Nokia reported lower than expected first quarter earnings today, but the part of the report that sent the stock down sharply was the news that the cellphone manufacturer had to cut margin estimates in upcoming periods because of rough competition in the smartphone industry. While the Finish based firm tallied a profit of 349 million EUR ($467.6 million USD) in the three month period ending in March, up from 122 million EUR in the previous year, the results fell short of the 370 million EUR that analysts had estimated for Nokia in the quarter.The key part of the report was the cut in expectations of full year operating margin to a range of 11%-13%, down from the previously projected 12%-14%. Competition in the global smartphone industry from Apple, Research In Motion, Samsung and Android powered devices are putting downward pressure on prices.

During Q1, Nokia sold 108 million handsets at an average price of  62 EUR. To show the effect of competition, last year the company sold 93 million units in the same period, but at a higher average selling price of 65 EUR. The company did manage to pick up a little market share according to estimates that show Nokia with a 33% piece of the mobile device market vs. 32% last year. The company has been trying to beat back the competition by offering items like free navigation on some models. There are also battles going on in the software area where Nokia has announced that its first handset to use the new Symbian 3 OS will be shipped later than expected in the third quarter. For the industry as a whole, Nokia forecasts 10% growth in handset shipments during 2010. Nokia's shares have declined by nearly 15% following the release of the report.

source: WSJ