Nokia warns of weaker sales, shares drop 13 percent

Reuters News
Posted: May 31, 2011 2:34 PM
Nokia warns of weaker sales, shares drop 13 percent

HELSINKI (Reuters) - Handset maker Nokia Oyj cut its sales outlook, citing weaker than expected margins and sales and sending its shares down 13 percent.

The company said it now expects net sales from its devices and services business in the second quarter to be "substantially below" its previous forecast of between 6.1 billion euros ($8.7 billion) and 6.6 billion.

"This update is primarily due to lower than previously expected average selling prices and mobile device volumes," the company said.

Nokia, the world's largest phone maker by volume, also said it was no longer appropriate to provide annual targets for 2011.

Nokia is in the midst of overhauling its phone business by adopting Microsoft Corp software instead of its own Symbian platform as it struggles to compete in the smartphone market.

Its share of the smartphone sector has fallen sharply over the past few years as it loses out to Apple Inc and other manufacturers of high-end handsets.

"Given the internal turmoil that will be generated by this news, it is increasingly difficult to see that Nokia can leapfrog one handset generation and be on par with the competition in early 2012. Investors should be more than concerned about the dividend possibility," said WestLB analyst Thomas Langer.

The warning comes a month after Nokia said it would cut 7,000 jobs and outsource its Symbian software development unit to cut costs.

The shares were down 13.2 percent at 5.00 euros by 8:30 a.m. EDT.

(Reporting by Helsinki Newsroom; Editing by Andrew Callus and David Holmes)

($1=.7000 Euro)