Nokia: 2011 going from bad to worse; Windows Phone 7 device in Q4

Summary:Nokia cut its second quarter and 2011 outlook as it struggles to fend off competition and is watching average selling prices for its devices tank.

Nokia on Tuesday cut its second quarter and 2011 outlook as it struggles to fend off competition and is watching average selling prices for its devices tank.

Conditions have unraveled for Nokia so quickly that the company said it can't give 2011 forecasts.

Also see: Nokia, RIM: Sidekicks walking through the valley of the shadow of death

These phones aren't selling.

The problem: Nokia is in limbo as it tries to sell Symbian based devices ahead of Windows Phone 7 devices in late 2011 and early 2012. Nokia confirmed that it will ship a Windows Phone 7 device in the fourth quarter. What's unknown is whether that device will be enough to salvage 2011 and give Nokia some confidence about 2012. In any case, Nokia is betting everything on Windows Phone. In the meantime, the company needs to sell you a few Symbian devices.

Nokia CEO Stephen Elop said:

"We recognize the need to deliver great mobile products, and therefore we must accelerate the pace of our transition. 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."

In a statement, Nokia said that its devices and services unit will produce second quarter sales "substantially below its previously expected range of EUR 6.1 billion to EUR 6.6 billion for the second quarter 2011." Nokia said device volume is lower than expected and average selling prices are tanking.

Second quarter operating margins, which were already cut before, are now expected to "substantially below" the 6 percent to 9 percent range for the second quarter. Device sales are looking weak and Nokia said its operating margin "could be around breakeven."

For the year, Nokia said "it is no longer appropriate to provide annual targets for 2011."

As for fixing the situation, Nokia said it is working to add capabilities to its Symbian portfolio to boost sales. The problem with Symbian is that Nokia will move on to another OS soon. Nokia said it will up its retail marketing.

The company has already restructured, but more layoffs could be on tap given the severity of the outlook.

Related:

Nokia cuts 4,000 jobs; Symbian developers to land at Accenture

Topics: Nokia, Enterprise Software, Microsoft, Mobility, Operating Systems, Software, Windows

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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