Nokia sold over 2 million Lumias in Q1, lowers outlook as margins evaporate

Nokia sold over 2 million Lumias in Q1, lowers outlook as margins evaporate
The first Nokia Windows Phone sales numbers are in: Nokia sold more than 2 million units of its newly launched Lumia series in the first quarter of 2012 for an average selling price of approximately $288 (220 euro). That however was not enough as competition waned it out of India, the Middle East, Africa and China, and gross margins evaporated for Nokia smartphones.

What’s shocking is the catastrophic overall slump in unit sales - Nokia sold only 83 million cell phones in total in Q1. That’s an unprecedented drop and clearly the biggeset we’ve seen in the industry ever - the figure is nearly 27% down compared to total sales of 113.5 million phones in Q4 2011. Smartphone sales are down 50% year-on-year.

This could well mean that Nokia is no longer the biggest phone maker as of Q1, topped by Samsung.

Nokia CEO Stephen Elop admitted that the results were "disappointing":



At the same time, particularly troubling is the drop in operating margin. In the first quarter, Nokia admitted operating margins fell to minus 3%, lower than the expected

And it’s only going to get worse in Q2 2012. Nokia projects an equal or worse second quarter citing the very same competitive factors. In a conference call right after the announcement, Elop explained that Android is expanding quicker than expected in the ultra low end, and white box Chinese manufacturers are pushing Nokia in developing markets. At the same time, the Finns don't have a high-end touchscreen feature phone, a segment dominated by phones like the Samsung Star and that's another issue the company recognizes.

In response, Nokia is trying to ramp up Windows Phone sales. The Nokia chief executive mentioned that Lumia 710 sales on T-Mobile exceeded expectations and the company was "very pleased with the initial response" to the Lumia 900.

Nokia stock is sinking at the moment in pre-market trading, down by the massive 17% so far at $4.15 a share.

source: Nokia


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94 Comments

94. Jerzy

Posts: 3; Member since: Apr 16, 2012

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93. FoneAddict

Posts: 263; Member since: Jul 05, 2011

This marks the beginning of the end for Nokia. Stephen Elop I hope you are proud of what you have achieved at Nokia.

92. snowgator

Posts: 3630; Member since: Jan 19, 2011

A ton of great comments and ideas in this thread. Even those that disagreed were civil. (Hope you took no offense to my use of humor, @Apple Conspiracy. Meant no disrespect.). Love these types of threads. I learn a ton!!

91. ZetanAlaz

Posts: 14; Member since: Apr 05, 2012

yeah Nokia.. I'm waiting for you... I think it's not that bad for Nokia.. maybe 2012 will be a tough year for Nokia, but they will show how powerful is WP.. it's started with 2 million, maybe on Q4, they can sell up to 20 million?? who knows, let the war begins..

90. SemperFiV12

Posts: 949; Member since: Nov 09, 2010

As it has been said before... for any company in such a heavy transitional period, a loss is expected. This loss has been further escalated due to the economic downturn in Europe and the US. Given the circumstances 2 million is a hefty amount that should encourage Nokia and MSFT a bit. An OS cannot gain traction with the flip of a switch, and timing and efforts have been a bit misconstrued on part of Microsoft. I can see the Windows Phone platform and manufacturers that use the OS gaining serious steam by first half of 2013. Of course things are currently looking hotter and hotter for the WP platform with the Marketplace expanding, specs being higher-ed with each update, the frequency and effectiveness of updates, and added models by manufacturers.

79. stipe

Posts: 33; Member since: Apr 05, 2012

Slowly but safely !!! YOu gonna succeed , Nokia !!!

66. mobilefuture

Posts: 224; Member since: Nov 12, 2011

After reading alot of comments on quite a few recent nokia articles i's good to know that nokia supporters still exist. In my locality everybody downs nokia soo much and i tell them just wait and see. Only one guy is like me in my locality. NOKIA FTW!!!!!!!!!

49. kamejoko

Posts: 257; Member since: Nov 10, 2011

Q4 2011 + Q1 2012 = 3M (all wp7 (low cost + medium cost) of nokia) . Q4 2011 + Q1 2012 = 5M (Galaxy Note (high cost) of SS).

46. redmd

Posts: 1965; Member since: Oct 26, 2011

I wish Nokia the very best this year and they will recover. however, I won't be buying Nokia windows phone at the moment. SGS3 here I come. btw, there's no such thing as galaxy champ. its galaxy y or Samsung champ.

27. Bluesky02

Posts: 1439; Member since: Dec 05, 2011

Symbian will fell, more bad news in the future. Why? : because nokia is slowing ditching it to make place for Windows Phone and Low end windows Phone Moreover Android smartphone is getting cheaper. Expect good news from Nokia next year.

23. ryq24

Posts: 876; Member since: Oct 17, 2011

go to any malls and you will notice that there are many people inside samsung store while at nokia store, most of the clerk are just standing waiting for customers to come in. nokia should quickly roll out their windows phone and they should have one lumia phone in each category just like what samsung has done. from high end like galaxy s2 to the low end like galaxy champ.

24. remixfa

Posts: 14605; Member since: Dec 19, 2008

they do that already 900 (high), 800 (middle upper), 710(middle), and they are now launching the prepaid capable 610. :) people just need to be patient. they are rebuilding an empire in an era of extreme competition. Its not going to happen over night. Apple revitalized the industry with the iphone and android has taken it to new heights that iOS never will. It takes a hot minute to be the new guy and get noticed.

38. Glim12808

Posts: 394; Member since: Oct 26, 2011

Any news on how the HTC Radar is doing at TMO?

40. remixfa

Posts: 14605; Member since: Dec 19, 2008

it stopped selling the moment the 710 came out. There was no point. Nokia kept the price on the 710 lower, while the specs were higher, and it came with free nokia maps & drive which is a huge selling point. the radar has zero advantages over the nokia. And thats exactly what people need to realize is nokia's game. they are going to undercut and outperform other WP7 makers until they are the vast majority of WP7 phones (which wont take long..lol). Then they will continue until the brand reaches a level of recognition and market share that they can safely raise prices on par with android and iOS.

48. Glim12808

Posts: 394; Member since: Oct 26, 2011

That's sad to hear. The Radar is my 1st WP device and I love it. But yes you're right. Nokia is going to dominate WP. Nokia will be to WP as Samsung is to Android. I can live with that.

54. remixfa

Posts: 14605; Member since: Dec 19, 2008

if you go to XDA and root it, you can get nokia maps & drive on the device, which will put it nearly on par with the 710. I have them running perfectly on my old HD7

11. AppleConspiracy

Posts: 637; Member since: Oct 18, 2011

We have all aready knew that even a year ago when this Nokia+MS strategy was announced. It was utterly wrong, and Stephen Elop didn't want to hear suggestions from the world. When they decided to dump MeeGo and excellent repsonse from N9, I knew they would fail. They can't compete with Apple and Droids, they are integrated in a perfectly stable paradigm, and Windows Phone is not, despite being a quality OS. They signed their death certificate, and this is pretty much expected confirmation. It's not so-called lack of vision that Steve Jobs had and others didn't, it's some strange lack of common sense in CEO-s of the World (RIM, Nokia, Sony...) that everyone else have except for them. I just don't get it - as if the qualification to run once an industry leader is not having even average IQ.

19. JSern

Posts: 282; Member since: May 22, 2011

tl;dr

25. Pdubb

Posts: 250; Member since: Aug 08, 2011

MeeGo wasn't enough. What is the main problem people have with WP7 as of now? No apps! MeeGo has the same problem and it does not have the cash of MS to sustain it while it grows or market the devices. Nokia was in a hard place I think they made a wise choice but time will tell.

29. remixfa

Posts: 14605; Member since: Dec 19, 2008

your thinking is so minimalistic and absolute. You are acting as if there is no room for 3, 4, or 5 phone OS's. Blackberry is out the window. MS is a known business partner. They are in a great position to take up a lot of business's needs as blackberry falls. They have the price point, the security, the brand recognition, and the fact that they are installed on more PC's than any other OS. With WP8 becoming a cohesive OS between PC and phone, it makes their position even stronger. It is also easy and intuitive which makes it very popular with teens and older people who want their first smartphone. I know, thats the 2 main groups I sell windows to. Both of those groups are main areas where mobile hand sets are expanding. You know.. the other 50% of americans who dont have smart phones. Your position stems from personal investment in an OS or from lack of knowledge.

39. snowgator

Posts: 3630; Member since: Jan 19, 2011

Again, the idea that either MeeGo or Symbian would have been a better solution for Nokia is a silly idea that shows you do not see the forest for the trees. Nokia was going broke. Their infrastructure was so streched that being the single largest phone manufacturer wasn't helping their bottom line. They were maintaining/updating/fixing 1 OS, trying to develop and market a new OS, trying to market their existing handsets worldwide, trying to develop and maintain their hardware, and trying to reign in this HUGE structure of a corporation that had dozens of layers of bureacratic nightmare all over it. By shedding Symbian and MeeGo and going to Windows Phones with MS (after talking to both Google about Android and RIM about BB07), they got a partner needing them as much as Nokia needed help. They can turn a greater profit on WP devices even if they sell less due to shedding all the layers of crap on the software side. MeeGo wasn't ready, had no app development, was a virtual unknown to the world, and was all on Nokia to promote. Symbian was falling behind, had dozens of versions to support, and was all on Nokia to support. WP is devloped and supported by Microsoft. Money in the bank. I believe this is why RIM is failing: an inability to devlop both sides of the equation and keep up. I believe this is why Apple may have peaked. I DO NOT MEAN DECLINING, Apple has way too many resourses built up to lose a ton of marketshare, I only mean that they have reached their appex. By developing both hardware and software, Apple cannot innovate at the pace of those only developing one side. Nokia did what they had to. They will either rise or fall on the strength of WP, but they would have fallen under their own weight had they kept on the same path.

51. hepresearch unregistered

There is no lack of common sense here... imho, this is a market-shaping conspiracy among the top echelon... this is a tactical play to shepherd the common consumer into a particular zone at a particular time... I just do not know the reason yet. These CEO's are not stupid, although they love to throw us little fake hints to help us think they are, and it gives them an excuse to keep acting the way they are already perceived to be. Elop keeps pretending to be dumb and all, and people who like Nokia tend to not be all that enthused with his behavior, and say that he is inadvertently shooting Nokia in the foot... however, from where I'm sitting, it looks to me that there is nothing inadvertent about it... the behavior is too consistent and calculated to be random stupidity... to me it looks like Elop is intentionally shooting Nokia in the foot every time he needs to in order to keep them down but not totally dead yet. It smacks of conspiracy to me. I believe that most of them know what is up, and the one's who don't are being compensated well to play their part in either partial or total ignorance.

53. remixfa

Posts: 14605; Member since: Dec 19, 2008

he is not shooting nokia in the foot. he is doing a controlled burn to get rid of the underbrush that is killing nokia slowly but surely. Gator was dead on the money. Sometimes you have to burn the city to make it better in the long run.

61. hepresearch unregistered

Yeah, like Caesar Nero in Rome, eh?

63. remixfa

Posts: 14605; Member since: Dec 19, 2008

nero was a bit of a nutjob. if i remember right, wasnt he the one that wanted to marry his horse and make it a senator? might not be the best comparison. lol

67. hepresearch unregistered

Actually comparing the behavior, not the person. I am not a fan of artificial controlled-burns in the market. Let them happen naturally... the market will correct itself as long as sufficient information is openly available to the public. Nero gave secret orders to set fire to the heart of Rome, and then sat by and cheered it on as it got worse. It burned out the old city center of ancient Rome, and as had been planned in advance, Nero took advantage of the opportunity to rebuild it in his own favored image... but at the expense of all the people who would have protested the idea, and initially thought it was just a terrible disaster. There were also many who lost their lives in it because it was carried out without the knowledge of the victims, and without warning. Similar things are going on at Nokia and MS... there is an agenda, but it is not the one that is being publicly shown off because these people in charge there are saying one thing and doing another.

73. snowgator

Posts: 3630; Member since: Jan 19, 2011

Nero, an emperor that was considered a near deity as be set on the thrown with only minor controls from the Senate at the time, is not a good comparison to Mr. Elop. I think anyone that thinks he made these moves without total approval from the Nokia Board who hired him is not applying the checks and balances of major corporations. Within months of his hire, Symbian was killed. You don't think that came up in the interview? He was totally honest with Nokia execs. Be bad to be. They stockpiled resources to be prepared for the transition to a different OS, which he was upfront in many stockholders meetings interviews would be a hard process. Bit, the controlled burn analogy is a great one, because markets dictated to Nokia they had to change. This was not Mr. Elop decision, the market and precious CEO's and company decision decided it for him. HOW it is being done is his decision, and he will be held accountable for those decisions. But Nokia had to change.

75. snowgator

Posts: 3630; Member since: Jan 19, 2011

Wow. A ton of grammar problems in there. I might thumb myself down. Do not know what happened.

81. hepresearch unregistered

Haha... no worries, I will have mercy... lol!

80. hepresearch unregistered

I agree Nokia had to change, but I don't like the method. I did not mean to compare Elop to Nero on a personal level, but I wanted to highlight the behavior similarity... turning to the controlled burn with little warning or heads-up to the customers or common shareholders, and at their quite obvious expense. Instead of gently and gradually working it out in the public view over the course of a couple years, it was announced by Elop all-at-once in a mass-media event, and the results were fairly instant, with continuing ramifications only getting worse over the year that followed. I thought that they would be beginning to enter stable territory, but as soon as a little down news comes out, amplified by Elop announcing his "disappointment", their stock takes another 16% hit in a single session opening. This controlled burn is being kept going past its needfulness, for what reason I am not sure.

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