High Lumia returns and 'compromise devices' hurting Nokia's smartphone comeback

Nokia is likely to cut its second quarter results forecasts, according to analysts, with new Lumias failing to impress.

Financial analyst RBC Capital Markets has trimmed full year estimates for Nokia's Lumias sales from 32 million to 30 million, citing lacklustre feedback on the company's new hero devices, the Lumia 928 and 925

In a note to clients on Thursday, RBC wrote that it was more likely than not that Nokia "may negatively preannounce its second quarter results over the next weeks", with a loss of three percent for its devices and services business, compared with Nokia's own outlook of a two percent loss, plus or minus four percentage points.

Nokia has said it expects Lumia sales in the second quarter will at least beat the 27 percent quarter-on-quarter growth seen in the first quarter , when it shipped 5.6 million Windows Phones. Consequently, it's expecting to sell 7.1 million this quarter.

However, RBC's forecasts are lower, and the analyst expects Nokia to only sell seven million. With Symbian in the mix, it should sell 7.5 million smartphones altogether.

Nokia's latest Lumia 928 and 925 appear to be "compromise devices", whose specs don't measure up to Samsung's flagship Galaxy S4 and HTC's One. Another problem Nokia is facing, according to RBC, is higher than normal return rates for its Lumia devices.

"[We are] trimming our CY13 devices estimates. Nokia appears to be a step behind the competition in introducing compelling smartphones with excitement around the Lumia now replaced by what we believe may be higher than normal return rates," the analyst wrote.

Meanwhile, Nokia's feature phone business is being hammered by cheaper Android devices such as Samsung's Galaxy Star in markets where its feature phones were traditionally popular.

The bottom already appeared to have fallen out of Nokia's feature phone sales in the first quarter , due to the arrival of low-cost Android smartphones that outshone its S40-based Asha range. 

RBC lowered its full year estimate for Nokia's feature phone business from 218 million to 196 million device shipments.

Nokia declined to comment on the RBC report when contacted by ZDNet. 


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