Nokia smartphone recovery in focus after weak Q3

Reuters News
Posted: Oct 19, 2011 7:13 PM
Nokia smartphone recovery in focus after weak Q3

By Tarmo Virki, European Technology Correspondent

HELSINKI (Reuters) - Nokia is expected to report a rare loss for the third quarter as the struggling Finnish cellphone giant prepares to launch its first Windows phones next week.

Investors will focus on whether Nokia can take advantage of the shifting sands in the smartphone industry.

Nokia, left in the dust by Apple and Google in the booming smartphone market, will introduce its first new models using Microsoft's Windows Phone platform next week in London.

It unveiled the Microsoft deal in February and has since struggled with a fast decline in smartphone sales as it has tried to sell models using old Symbian platform.

Analysts expect Nokia sold 15.9 million smartphones in the third quarter, down 40 percent from a year ago, despite sharp price cuts in early July.

"The big question is: did we see the bottom in smartphones? I think we did," said Jari Honko, analyst at Swedbank.

Hit by weak smartphone sales, Nokia is expected to report an underlying quarterly operating loss of 23 million euros, down from a profit of 391 million in the previous quarter.

Numbers could include one-off charges for restructuring and also development support from new partner Microsoft.

With Microsoft software, Nokia hopes to gain the kind of attention Apple and Google have attracted from software developers that enrich their devices.

So far Windows Phone's success has been limited -- its market share is just 2-3 percent, compared with around 50 percent for Google's Android and around 15 percent share for Apple.

Apple's iPhone sales dropped to 17.1 million in the September quarter, disappointing investors, but were still ahead of Nokia's expected sales and the new iPhone 4S is breaking Apple's previous sales records.

Nokia has not rushed with new models -- despite the close partnership with Microsoft, nimbler rivals HTC, Fujitsu and Samsung Electronics have beat it with models using latest Windows software, Mango.

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In addition to these Nokia will also have to battle Samsung's new Galaxy Nexus -- the first smartphone running on the latest version of the Android software -- in a holiday sales season hit by weakening consumer spending.

While the outlook for consumer spending has worsened in recent weeks, analysts have changed their fourth-quarter cellphone sales forecasts only slightly, with a Reuters poll showing they expect a historically normal 12 percent quarter-on-quarter rise.

Weakening economies could hit the results of Nokia's telecom gear venture Nokia Siemens Networks, and its bigger rival Ericsson, due to report earlier on Thursday.

Smaller telecom gear maker Powerwave warned this week that operators were reducing or postponing near-term spending around the globe, and especially in North America, a key market for Ericsson.

(Reporting By Tarmo Virki; Editing by Helen Massy-Beresford)