Nokia shares plunge on first quarter profit warning

Nokia cut on Wednesday its first quarter operating margin outlook as fierce competition hurt its mobile phone sales, sending the company's share price plunging more than 14 percent.

"Nokia today provided preliminary information on certain aspects of its first quarter 2012 financial performance, including a lowered first quarter 2012 outlook for Devices & Services," the Finnish company said.

It said its operating margin in the first quarter was "approximately negative 3.0 percent, compared to the previously expected range of 'around breakeven, ranging either above or below by approximately 2.0 percentage points'."

The world's biggest mobile phone maker, which is struggling on the highly competitive smartphone market, said several factors negatively affected Nokia's Devices & Services business to a greater extent during the first quarter than previously expected.

Those factors included "competitive industry dynamics, which negatively affected net sales in the Mobile Phones and Smart Devices business units, particularly in India, the Middle East and Africa and China; and gross margin declines, particularly in the Smart Devices business unit," it said.

Nokia said it expected Devices & Services net sales in the first quarter of 4.2 billion euros, including 2.3 billion euros for Mobile Phones and 1.7 billion euros for Smart Devices.

The company is scheduled to publish its first quarter earnings report on April 19.

For the second quarter, Nokia said its Devices & Services operating margin would be "similar to or below the first quarter 2012 level."

Nokia shares closed down 14.5 percent on the Helsinki stock exchange on a flat market.

Nokia chief executive Stephen Elop said the first quarter results were "disappointing" but noted the Devices & Services business was "in the midst of transition."

The Finnish company is undergoing a major restructuring, phasing out its Symbian line of smartphones in favour of a partnership with Microsoft that has produced a first line of Lumia smartphones.

Nokia is depending heavily on the new phones to help maintain its ranking as the world's largest mobile phone maker as it operates in a rapidly changing landscape with RiM's Blackberry, Apple's iPhone and handsets running Google's Android platform take growing bites out of its market share.

But just days after launching its new flagship Lumia 900 model in the United States, the company admitted Wednesday the smartphone contained a software bug that could lead users to lose their Internet connection.

"A memory management issue was discovered that could, in some cases, lead to loss of data connectivity. This issue is purely in the phone software, and is not related to either phone hardware or the network itself," the company said in a statement.

Nokia said it would provide a solution by April 21 and offer affected users a 100-dollar (76-euro) credit.

The company said meanwhile in its profit warning that it had sold more than two million Lumia devices in the first quarter, at an average selling price of approximately 220 euros.

It said it was "quickly taking action" to address its woes, stressing it would "continue to increase its focus on accelerating Lumia sales, as well as on lowering the company's cost structure, improving cash flow and maintaining a strong financial position."

In February, Nokia said it would cut 4,000 jobs at its smartphone manufacturing facilities in Finland, Hungary and Mexico by the end of this year, shifting manufacturing to Asia in order to boost competitiveness.

Nokia registered a net loss of 1.2 billion euros ($1.5 billion) in 2011, compared to a net profit of 1.8 billion euros a year earlier, while the final quarter of the year was hammered with a 1.07-billion-euro net loss after a profit of 745 million in the same period a year earlier.

  • Thursday #sgroundup: Body found of boy who made first call from Korea ferry: report 35 minutes ago
    Thursday #sgroundup: Body found of boy who made first call from Korea ferry: report

    Here are today’s top trending stories in case you missed them.

  • Look, don't touch: Flickr photo of the day 12 hours ago
    Look, don't touch: Flickr photo of the day

    If there's one car that's particularly sought-after among today's well-heeled car collectors, a Ferrari 250 would be it. Usually it's the GTO variant, like the 1963 that sold for a record $52 million last year. A 250 of any sorts demands unfathomable cash, however, which is why we can but gawk at this 250 Testa Rossa. It's as close as any mere mortal will ever come to owning one.

  • Peeling out at Octane Academy, the free driving school for Ford ST owners 13 hours ago
    Peeling out at Octane Academy, the free driving school for Ford ST owners

    Buyers of Ferraris or Jaguars are used to perks from manufacturers – including racetrack lessons to help master their exotic machines. But for enthusiasts on a tighter budget, the Ford ST Octane Academy might be the sweetest deal in motoring: Buy a Ford Fiesta ST or Focus ST hatchback, and the reward is a free day of training at one of America’s longest, most-lavish road courses.

  • David Moyes statement after Man United firing
    David Moyes statement after Man United firing

    Statement released by David Moyes on Wednesday, a day after Manchester United announced he left as manager after less than a season in charge.

  • Indonesian general says his flashy watch is a fake
    Indonesian general says his flashy watch is a fake

    JAKARTA, Indonesia (AP) — Indonesia's military commander said critics who called him out for wearing an especially luxurious watch should be quiet because the timepiece is actually a cheap Chinese fake.

  • Pirates kidnap three on Singapore tanker off Malaysia
    Pirates kidnap three on Singapore tanker off Malaysia

    Armed pirates boarded a Singapore-managed oil tanker in the Strait of Malacca, kidnapping three Indonesian crew and stealing some of the vessel's shipment of diesel fuel, the International Maritime Bureau said Wednesday. The attack occurred early Tuesday off Malaysia's west coast, said Noel Choong, head of IMB's Kuala Lumpur-based piracy reporting centre. The diesel oil tanker was believed to be en route to Myanmar. "IMB is aware of the attack on the Singapore-managed ship in the Malacca Straits.