Nokia CEO Stephen Elop
Embattled mobile phone firm Nokia has cancelled its financial targets for 2011 after announcing it expects sales and profit to be substantially lower than previously reported.
Nokia has retained its outlook for its Devices & Services for Q2 2011 but a number of factors have negatively impacted figures and forced the Finnish company to lower outlook, it said. It now expects net sales to be "substantially below" its previously stated target of €6.1bn to €6.6bn. "This update is primarily due to lower than previously expected average selling prices and mobile device volumes," Nokia said in a statement.
It expects non-IFRS operating margin to be around breakeven, down from the range of 6% to 9% it had previously suggested.
Nokia believes following this "unexpected change" in its Q2 outlook, "it is no longer appropriate to provide annual targets for 2011".
Nokia said the factors which had negatively impacted its business "to a greater extent than previously expected" include "the competitive dynamics and market trends across multiple price categories, particularly in China and Europe; product mix shift towards devices with lower average selling prices and lower gross margins; and pricing tactics by Nokia and certain competitors."
"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," the statement added.
"Strategy transitions are difficult. We recognise the need to deliver great mobile products, and therefore we must accelerate the pace of our transition," said Stephen Elop, 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’s second quarter results are due out on July 21.
In the hours after this announcement was made Nokia’s share price plunged and at time of going to press was down 18%.
