Nokia Lowers Expectations

According to ABI Research, Nokia Siemens’ earnings report today was devastating news for the company. The mobile phone maker warned that it would not meet its Q2 sales and margin targets, and was forced to reset expectations for its full-year 2011 outlook. The company stated that net sales of devices and services would not meet even the low end of its forecast target of 6.1 billion Euros.??

“Nokia’s loss of ground in the smartphone market has been well documented, but this performance indicates that it’s also now struggling in the low-end, low-cost market where the company had been particularly strong,” said ABI Research VP and practice director Kevin Burden, in a statement. "This news indicates that pressure is intensifying at both ends of the market, and Nokia can no longer count on any of its product lines to be a bridge from its industry-leading past to what it hopes would be a competitive future.”

Beyond pulling back its guidance on its full-year outlook for 2011, Nokia is stepping away from offering annual targets, which is a clear indication the company no longer trusts its own market visibility.?? Although the switch to Windows Phone as its future smartphone platform may have been a sound decision given the alternatives at the time it was made, this news intensifies the doubt that Nokia will be able to deliver handsets in 2012 that are superior to its competitors’.

“Key to Nokia’s strategy is its belief that, with its initial line of Windows phones, it can vault ahead of competitors that are currently building Windows-powered phones,” said Burden. “The turmoil within Nokia – started by the changes in management, intensified by the shifts in strategy, and now boiling over into weak market performance – is cementing doubts that Nokia can pull it off."