Analysts anticipate Nokia’s operating profit will weaken by about one-third during Q1/2011

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The profitability of the Finnish mobile phone manufacturer Nokia has weakened sharply over the period from January through March, estimate 31 analysts involved in a survey conducted by the Reuters news agency.
      The median forecast for Nokia’s first quarter 2011 net operating profit excluding the one-time items is EUR 547 million. In comparison, a year ago the net operating profit during the same period was EUR 820 million.
     
If the comparison period were extended back to the first quarter of 2008, the net operating profit would collapse by more than EUR 1.4 billion.
      A median is the numeric value separating the higher half of a sample from the lower half.
      At the same time, the analysts expect Nokia net sales to have increased by 6%, amounting to EUR 10.2 billion.
     
Nokia’s profitability has long been weakening as a consequence of the stumbling sales of the company’s smartphones.
      Based on a rough calculation, Nokia should sell at least a dozen or so phones in the price range of less than EUR 40 in order to gather the same profit margin as one smartphone for EUR 400 would yield.
     
In January, Nokia estimated that the company’s non-IFRS operating margin in Devices & Services would be between 7% and 10% in the first quarter of 2011.
      In the survey conducted by Reuters, the median forecast for Nokia’s non-IFRS operating margin in Devices & Services is 8.8%.
     
The analysts estimate that the net operating profit in Nokia’s Devices and Services unit would be EUR 621 million. If the estimate were accurate, the unit’s net operating profit would have declined by EUR 183 million within a year.
      Nokia’s profitability has been further weakened by the losses suffered by Nokia Siemes Networks.
      The analysts calculate that Nokia Siemens Networks’ net operating loss without one-time items was EUR 44 million in the period from January through March.
      Nokia Siemens Networks is a joint venture co-owned by Nokia and the German engineering conglomerate Siemens AG, the results of which are reported as a part of Nokia’s financial reports.
     
Nokia is to publish its first quarter 2011 results on Thursday, April 21, 2011.
      The market will be looking forward with interest to see the numbers, though it is unlikely that there will be any evidence as yet of the new direction the company has taken, in embarking on cooperation with Microsoft on use of the Windows Phone operating system as the primary software platform for its smartphones.


Previously in HS International Edition:
  Nokia starts co-determination talks with staff as planned (15.4.2011)
  Nokia: Microsoft talks are progressing on schedule (5.4.2011)
  At least in Finland, Nokia continues to have a strong foothold in the smartphone market (1.3.2011)

See also:
  Nokia´s new strategy prompts suspicions among investors and consumers alike (15.2.2011)

Links:
  Nokia

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