Nokia financial guidance on 2Q spells disaster

Nokia has cut its second quarter financial guidance. Nokia said it now expects second quarter net sales in its mobile devices and services business to be at the lower end of its previous guidance for Euro 6.7 billion to Euro 7.2 billion, due to lower than expected average selling price and device volumes.

Gartner vice president and distinguished analyst, Nick Jones, commented: “Nokia just released a warning that its 2010 results will be worse than expected with reduced margins caused by stiff competition in high end devices, which will shift its product mix towards the low end. That means lower than expected profits.

“This is also an implicit statement that the Symbian user experience won’t be fixed this year, and Meego won’t arrive in time to make a difference in 2010 either,” continued Jones. “Back when we wrote the most recent Nokia vendor rating we pointed out that this is a critical year for Nokia during which several things have to be fixed. This includes the high end smartphone portfolio which has to compete with Android, an Apple-beating ultra-high end device, which is intended to come from the Meego team, and Ovi which needs more users and more developers to jump start the virtuous cycle that app stores and ecosystems need.

“Oh, and it would be nice if NSN was turned around too, although Nokia could probably amputate and sell it pretty easily,” said Jones.

He added: “It’s looking now as if 2010 won’t be the year in which Nokia’s problems get fixed, and I suspect the investors are running out of patience and will want to hold someone accountable. That makes me wonder if the recent re-org may not be the last of the executive changes we’ll see in 2010.”

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