Nokia Oyj, which was overtaken by Apple Inc. as the largest maker of mobile phones last quarter, cut its sales forecast on lower prices and competition from rivals including Google Inc. (GOOG) The stock plunged as much as 13 percent.
Second-quarter net sales of the devices and services division will be “substantially” below the 6.1 billion-euro to 6.6 billion-euro ($9.5 billion) range, the Espoo, Finland-based company said in a statement today. The unit’s non-IFRS operating margin will fall short of the 6 percent to 9 percent range, it said.
“They are forced to discount a lot,” Lee Simpson, an analyst at Jefferies International Ltd. in London with a “sell” rating on the share, said via phone. “No-one wants these handsets. This is the real terrible year for these guys.”
Chief Executive Officer Stephen Elop turned to Microsoft’s Windows Phone 7 to restore Nokia’s smartphone prospects after determining that the company’s own Symbian and MeeGo systems couldn’t keep up with Google’s Android, the fastest-growing smartphone platform, and Apple’s iPhone.
The stock dropped as much as 76 cents to 5 euros, the lowest intraday price since February 1998 and was down 12 percent as of 3:35 p.m.
“Strategy transitions are difficult,” Elop said today. “We must accelerate the pace of our transition.” He said he has “increased confidence” that Nokia will ship its first Nokia product with the Windows operating system in the fourth quarter 2011.
Nokia said it’s no longer appropriate to provide full-year targets. The company called 2011 and 2012 “transition years” in its Feb. 11 statement.
Nokia’s first-quarter handset revenue rose 6.4 percent to 7.09 billion euros, surpassed for the first time by iPhone sales of $12.3 billion in the period.