Nokia has provided preliminary information on certain aspects of their first quarter 2012 financial performance, including a lowered first quarter 2012 outlook for devices and services. During the first quarter 2012, multiple factors negatively affected Nokia's devices and services business to a greater extent than previously expected. These 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.
Nokia raises the curtains on the Lumia 900

2 million Lumia devices sold

The impact of these factors on the non-IFRS Devices and Services operating margin in the first quarter 2012 was partially offset by a significant benefit from lower warranty costs. Nokia has estimated that its non-IFRS Devices and Services operating margin in the first quarter 2012 was approximately negative 3 percent, compared to the previously expected range of “around breakeven, ranging either above or below by approximately 2 percentage points” primarily due to the factors noted above.

However, the company is expecting a better show in the second quarter of 2012. “Our disappointing Devices & Services first quarter 2012 financial results and outlook for the second quarter 2012 illustrates that our Devices & Services business continues to be in the midst of transition,” said Stephen Elop, President and CEO of Nokia. “Within our Smart Devices business unit, we have established early momentum with Lumia, and we are increasing our investments in Lumia to achieve market success. Our operator and distributor partners are providing solid support for Windows Phone as a third ecosystem, as evidenced most recently by the launch of the Lumia 900 by AT&T in the United States.

In the first quarter 2012, Nokia sold more than 2 million Lumia devices. The Windows Phone ecosystem has also attracted more developers and has expanded rapidly with more than 80,000 applications available. Nokia will provide the full first quarter results and more details when it reports its first quarter 2012 results on April 19, 2012. However, from this brief it can definitely be concluded that the company is still in transition, but the future could still be bright.

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