While investors were certain that Nokia (OMX: NOK1V, NYSE: NOK) would have a dreadful Q1, it was even worse than feared. Nokia now says that Devices & Services operating margin in Q1 was around -3%. Even worse, the Finnish company predicts Q2 non-IFRS operating margin to be on par or below Q1 numbers. The company blames heavy competition and ongoing structural changes.
While some excitement has been created with the Lumia launch, the company sold just 2 million of those in Q1. Its massive smartphone beta test campaign also shot itself in the foot as Lumia 900, not all that surprisingly in this space, had some problems maintaining connection with the network. Nokia is trying to rectify this issue, reportedly stemming from a software bug, by compensating users.
Nokia’s net cash and liquid assets dropped clearly. The company is trying to cut costs in production while investing more heavily in Lumia to try to maintain balance sheet strength. The stock has plummeted almost 15% following the news.
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