Nokia lowers Devices & Services second quar...
Published May 31, 2011
Nokia Corporation
Stock exchange release
May 31, 2011 at 15:00 (CET +1)
Espoo, Finland - Nokia today commented on factors impacting its business and
updated its second quarter and full year 2011 outlook for Devices & Services.
During the second quarter 2011, multiple factors are negatively impacting
Nokia's Devices & Services business to a greater extent than previously
expected. These factors include:
- the competitive dynamics and market trends across multiple price categories,
particularly in China and Europe;
- a product mix shift towards devices with lower average selling prices and
lower gross margins; and
- pricing tactics by Nokia and certain competitors.
Updated outlook for Devices & Services for the second quarter 2011:
- Nokia now expects Devices & Services net sales to be substantially below its
previously expected range of EUR 6.1 billion to EUR 6.6 billion for the second
quarter 2011. This update is primarily due to lower than previously expected
average selling prices and mobile device volumes.
- Nokia now expects Devices & Services non-IFRS operating margin to be
substantially below its previously expected range of 6% to 9% for the second
quarter 2011. This update is primarily due to lower than previously expected net
sales. While visibility is very limited, Nokia's current view is that second
quarter 2011 Devices & Services non-IFRS operating margin could be around
breakeven.
Updated outlook for Devices & Services for the full year 2011:
- Given the unexpected change in our outlook for the second quarter, Nokia
believes it is no longer appropriate to provide annual targets for 2011.
However, Nokia expects to continue to provide short-term quarterly forecasts in
its interim reports as well as annual targets when circumstances allow it to do
so.
- Nokia's previous targets for the third quarter, fourth quarter, and full year
2011 were: 1) Net sales in Devices & Services to be at approximately the same
level in the third quarter 2011 as in the second quarter 2011, and seasonally
higher in the fourth quarter 2011, compared to the third quarter 2011; 2)
Devices & Services non-IFRS operating margin to be between 6% and 9% in 2011.
These targets are no longer valid.
Nokia is taking immediate action to address the issues that are impacting its
Devices & Services business. Nokia's high-level strategic objectives and targets
remain unchanged.
- Nokia is continuing to invest to bring new innovative capabilities to its
Symbian line up. In addition, Nokia has taken price actions on its current
smartphone portfolio, and Nokia is intensifying its focus on retail point-of-
sales marketing.
- Nokia started shipping its new dual-SIM devices last week.
- Nokia remains pleased with its progress on its Windows Phone strategy, and has
increased confidence that the first Nokia product with Windows Phone will ship
in the fourth quarter 2011.
- Nokia remains committed to its target to reduce its Devices & Services non-
IFRS operating expenses by EUR 1 billion for the full year 2013, compared to the
full year 2010, and plans to implement these reductions as quickly and
effectively as possible.
- After the transition, Nokia continues to target Devices & Services net sales
to grow faster than the market and Devices & Services non-IFRS operating margin
to be 10% or more.
"Strategy transitions are difficult. We recognize the need to deliver great
mobile products, and therefore we must accelerate the pace of our transition,"
said Stephen Elop, president and CEO of Nokia. "Our teams are aligned, and we
have increased confidence that we will ship our first Nokia product with Windows
Phone in the fourth quarter 2011."
Nokia will provide its second quarter results and more details when it reports
its Q2 2011 results on July 21, 2011.
Nokia will be hosting a conference call at 13:30 UK time (8:30 EST). The dial-in
number for media (listen only - the question and answer session will be limited
to financial analysts and investors only) is +1 706 634 5012. Conference ID:
72156605.
The dial-in number for financial analysts and investors is US: +1 888 636 1561.
Conference ID: 72156605. UK: +44 1452 560 299. Conference ID: 72175614.
A replay of the call will be available soon after the call completion. The
replay number is US: +1 800 642 1687. Conference ID: 72156605. UK:
+44 1452 55 0000. Conference ID: 72175614.
About Nokia
Nokia is committed to connecting people to what matters to them by combining
advanced mobile technology with personalized services. More than 1.3 billion
people connect to one another with a Nokia, from our most affordable voice-
optimized mobile phones to advanced Internet-connected smartphones sold in
virtually every market in the world. Through Ovi (www.ovi.com), people also
enjoy access to maps and navigation on mobile, a rapidly expanding applications
store, a growing catalog of digital music, free email and more. Nokia's NAVTEQ
is a leader in comprehensive digital mapping and navigation services, and Nokia
Siemens Networks is one of the leading providers of telecommunications
infrastructure hardware, software and professional services globally.
FORWARD-LOOKING STATEMENTS
It should be noted that certain statements herein which are not historical facts
are forward-looking statements, including, without limitation, those regarding:
A) the expected plans and benefits of our strategic partnership with Microsoft
to combine complementary assets and expertise to form a global mobile ecosystem
and to adopt Windows Phone as our primary smartphone platform; B) the timing and
expected benefits of our new strategy, including expected operational and
financial benefits and targets as well as changes in leadership and operational
structure; C) the timing of the deliveries of our products and services; D) our
ability to innovate, develop, execute and commercialize new technologies,
products and services; E) expectations regarding market developments and
structural changes; F) expectations and targets regarding our industry volumes,
market share, prices, net sales and margins of products and services; G)
expectations and targets regarding our operational priorities and results of
operations; H) expectations and targets regarding collaboration and partnering
arrangements; I) the outcome of pending and threatened litigation; J)
expectations regarding the successful completion of acquisitions or
restructurings on a timely basis and our ability to achieve the financial and
operational targets set in connection with any such acquisition or
restructuring; and K) statements preceded by "believe," "expect," "anticipate,"
"foresee," "target," "estimate," "designed," "plans," "will" or similar
expressions. These statements are based on management's best assumptions and
beliefs in light of the information currently available to it. Because they
involve risks and uncertainties, actual results may differ materially from the
results that we currently expect. Factors that could cause these differences
include, but are not limited to: 1) our ability to succeed in creating a
competitive smartphone platform for high-quality differentiated winning
smartphones or in creating new sources of revenue through our partnership with
Microsoft; 2) the expected timing of the planned transition to Windows Phone as
our primary smartphone platform and the introduction of mobile products based on
that platform; 3) our ability to maintain the viability of our current Symbian
smartphone platform during the transition to Windows Phone as our primary
smartphone platform; 4) our ability to realize a return on our investment in
MeeGo and next generation devices, platforms and user experiences; 5) our
ability to build a competitive and profitable global ecosystem of sufficient
scale, attractiveness and value to all participants and to bring winning
smartphones to the market in a timely manner; 6) our ability to produce mobile
phones in a timely and cost efficient manner with differentiated hardware,
localized services and applications; 7) our ability to increase our speed of
innovation, product development and execution to bring new competitive
smartphones and mobile phones to the market in a timely manner; 8) our ability
to retain, motivate, develop and recruit appropriately skilled employees; 9) our
ability to implement our strategies, particularly our new mobile product
strategy; 10) the intensity of competition in the various markets where we do
business and our ability to maintain or improve our market position or respond
successfully to changes in the competitive environment; 11) our ability to
maintain and leverage our traditional strengths in the mobile product market if
we are unable to retain the loyalty of our mobile operator and distributor
customers and consumers as a result of the implementation of our new strategy or
other factors; 12) our success in collaboration and partnering arrangements with
third parties, including Microsoft; 13) the success, financial condition and
performance of our suppliers, collaboration partners and customers; 14) our
ability to source sufficient quantities of fully functional quality components,
subassemblies and software on a timely basis without interruption and on
favorable terms, including the disruption of production and/or deliveries from
any of our suppliers as a result of adverse conditions in the geographic areas
where they are located; 15) our ability to manage efficiently our manufacturing,
service creation, delivery and logistics without interruption; 16) our ability
to ensure the timely delivery of sufficient volumes of products that meet our
and our customers' and consumers' requirements and manage our inventory and
timely adapt our supply to meet changing demands for our products; 17) any
actual or even alleged defects or other quality, safety and security issues in
our products; 18) any actual or alleged loss, improper disclosure or leakage of
any personal or consumer data collected or made available to us or stored in or
through our products; 19) our ability to successfully manage costs, including
our ability to achieve targeted costs reductions and to effectively and timely
execute related restructuring measures, including personnel reductions; 20) our
ability to effectively and smoothly implement the new operational structure for
our devices and services business effective April 1, 2011; 21) the development
of the mobile and fixed communications industry and general economic conditions
globally and regionally; 22) exchange rate fluctuations, including, in
particular, fluctuations between the euro, which is our reporting currency, and
the US dollar, the Japanese yen and the Chinese yuan, as well as certain other
currencies; 23) our ability to protect the technologies, which we or others
develop or that we license, from claims that we have infringed third parties'
intellectual property rights, as well as our unrestricted use on commercially
acceptable terms of certain technologies in our products and services; 24) our
ability to protect numerous Nokia, NAVTEQ and Nokia Siemens Networks patented,
standardized or proprietary technologies from third-party infringement or
actions to invalidate the intellectual property rights of these technologies;
25) the impact of changes in government policies, trade policies, laws or
regulations and economic or political turmoil in countries where our assets are
located and we do business; 26) any disruption to information technology systems
and networks that our operations rely on; 27) unfavorable outcome of
litigations; 28) allegations of possible health risks from electromagnetic
fields generated by base stations and mobile products and lawsuits related to
them, regardless of merit; 29) our ability to achieve targeted costs reductions
and increase profitability in Nokia Siemens Networks and to effectively and
timely execute related restructuring measures; 30) Nokia Siemens Networks'
ability to maintain or improve its market position or respond successfully to
changes in the competitive environment; 31) Nokia Siemens Networks' liquidity
and its ability to meet its working capital requirements; 32) whether Nokia
Siemens Networks is able to successfully integrate the acquired assets of
Motorola Solutions 's networks business, retain existing customers of the
acquired business, cross-sell Nokia Siemens Networks' products and services to
customers of the acquired business and otherwise realize the expected synergies
and benefits of the acquisition; 33) Nokia Siemens Networks' ability to timely
introduce new products, services, upgrades and technologies; 34) Nokia Siemens
Networks' success in the telecommunications infrastructure services market and
Nokia Siemens Networks' ability to effectively and profitably adapt its business
and operations in a timely manner to the increasingly diverse service needs of
its customers; 35) developments under large, multi-year contracts or in relation
to major customers in the networks infrastructure and related services business;
36) the management of our customer financing exposure, particularly in the
networks infrastructure and related services business; 37) whether ongoing or
any additional governmental investigations into alleged violations of law by
some former employees of Siemens AG may involve and affect the carrier-related
assets and employees transferred by Siemens AG to Nokia Siemens Networks; 38)
any impairment of Nokia Siemens Networks customer relationships resulting from
ongoing or any additional governmental investigations involving the Siemens
carrier-related operations transferred to Nokia Siemens Networks; as well as the
risk factors specified on pages 12-39 of Nokia's annual report Form 20-F for the
year ended December 31, 2010 under Item 3D. "Risk Factors." Other unknown or
unpredictable factors or underlying assumptions subsequently proving to be
incorrect could cause actual results to differ materially from those in the
forward-looking statements. Nokia does not undertake any obligation to publicly
update or revise forward-looking statements, whether as a result of new
information, future events or otherwise, except to the extent legally required.
Media and Investor Enquiries:
Nokia
Communications
Tel. +358 7180 34900
Email: press.services@nokia.com
Investor Relations Europe
Tel. +358 7180 34927
Investor Relations US
Tel. +1 914 368 0555
www.nokia.com
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: NOKIA via Thomson Reuters ONE
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