Nokia lowers smartphone sales outlook as financial woes continue

Firm touts two million Lumia sales but emerging markets fail to generate expected returns

Nokia has warned that its first and second quarter earnings for 2012 are likely to be lower than first forecast, as the firm continues to struggle with its ongoing transition and rabid competition from Apple's iPhone devices and the burgeoning Android ecosystem and its partners.

Nokia had initially predicted that its first quarter revenues would be flat, but has now warned they will drop by up to three per cent. A similar decline is expected in its second quarter.

The firm blamed the drop on generating lower income per device sale and more worryingly on what it termed, "competitive industry dynamics", which hurt phone sales in markets such as India, the Middle East, Africa and China.

These are markets where the firm has been hoping it can out-perform its rivals thanks to its heritage and strong supply chain.

Chief executive Stephen Elop acknowledged the numbers were disappointing but claimed it underlined the changes the firm has been forced to undertake to reinvent itself.

"Our disappointing devices and services first quarter 2012 financial results and outlook for the second quarter 2012 illustrates that our devices and services business continues to be in the midst of transition," he explained.

The firm attempted to spin some good news from the announcement, though, revealing it sold over two million Lumia devices in the first quarter of 2012.

Elop said the recently launched Lumia 900 in the US was further evidence Nokia was growing in market presence.

"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," he said.

"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 US."

However, this launch has not gone smoothly, with the firm forced to admit it was launched with a software issue that affects the phone's internet connectivity, with Nokia promising a fix and looking to appease customers by offering $100 in credit.

Ovum analyst Nick Dillon told V3 the figures were not hugely surprising given the move away from the Symbian platform, which had been the source of most of the firm's revenues in the past.

"Sales of Windows Phone devices haven't perhaps been as strong as it would have hoped to replace the Symbian drop-off, but two million Lumia sales is an improvement so things are at least going in the right direction," he said.

"Last year was pretty much a write-off for Nokia as it made its transition and it's not great the start of 2012 has started like this, but they've got until the end of the year to push forward and try to ramp-up sales."