Nokia warns on Q2, drops FY targets

Reuters News
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Posted: May 31, 2011 2:22 PM
Nokia warns on Q2, drops FY targets

STOCKHOLM (Reuters) - Nokia, the world's biggest phone maker by volume, warned on Tuesday that sales and margins would fall well below its previous guidance and dropped its full-year outlook, sending its shares down 10 percent.

Nokia, which has been losing ground in the smartphone market to newcomers Apple Inc and Google Inc, said it expected its non-IFRS operating margin for Devices & Services could be around break-even in the second quarter.

That compared with previous guidance for a margin in the range of 6 percent to 9 percent in the period.

Following are analyst comments regarding the news:

WESTLB ANALYST THOMAS LANGER

"I think it is devastating now that shortly after the AGM we have this very negative news out from Nokia. Q2 and Q3 is one story, but I think this will raise doubts about the potential recovery trend based on Mango."

"What worries more is that Nokia will not be the only one with Mango and the Nokia hardware and user interface has to be more compelling than those from competitors.

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."

Nokia shares were down 9.8 percent to 5.195 euros in Helsinki by 1217 GMT.

(Reporting by Stockholm Newsroom)