Sales slump will be twice as bad as predicted
Nokia’s first quarter figures show the tough environment we are in right now, with net sales down 27% year on year and on the previous quarter, and a 90% fall in first-quarter net profit.
The vendor found things especially tough across its devices businesses, where sales volumes were down 19%, against a predicted industry norm of a 14% drop.
Olli-Pekka Kallasvuo, CEO, said retailers clearing out old stock had hit the vendors hard in the first quarter, but could lead to a better second quarter. Nokia expects its mobile device market share in the second quarter 2009 to increase sequentially as the market records a similar quarter to Q1.
"The inventory already in the sales channels decreased substantially during Q1 due to extensive destocking by operators and distributors. This adversely impacted our sales volumes in the quarter. However, it has also resulted in the demand picture becoming more predictable as we enter the second quarter," he said.
There was slightly better news from its services business, which was up 79% in sales on the previous year, although down 5% sequentially. NSN had reported operating loss of EUR 361 million for Q1, compared with an operating loss of EUR 74 million in the first quarter 2008, with an operating margin of -12.1. The loss reflected lower sales, the vendor said.
On the equipment side, Nokia Siemens Networks recorded net sales of EUR 3.0 billion, down 12% year on year and down 31% sequentially. This was a bad enough result for Nokia Siemens Networks to re-forecast the level of decline in the equipment market. It now expects the mobile infrastructure and fixed infrastructure and related services market to decline approximately 10% in Euro terms in 2009, from 2008 levels. This is an update to an earlier estimate that the market would decline 5% or more in Euro terms in 2009, from 2008.