Business | Telecoms
Nokia cuts outlook as iPhone takes off
Smartphone price plunges 17%
- Reuters
- Published: 00:00 April 23, 2010
- Image Credit: Bloomberg News
- Customers at a Nokia store in London. The smartphone market continued to expand throughout the economic downturn.
Helsinki : Nokia yesterday cut the profit outlook for its key phone unit as the world's top cellphone maker struggles in the market for more expensive handsets, sending its shares sharply lower.
Nokia still lacks a top-range model to challenge Apple's iPhone three years after its launch. Its last high-end hit phone was the N95, which was unveiled in 2006.
"Everyone wants an iPhone and their competitors have now made it impossible for them," said BGC Partners partner David Buik.
Shares in Nokia were 12.7 per cent lower at 9.85 euros yesterday, dragging the STOXX Europe 600 Technology Index 3.4 per cent lower.
Apple's quarterly results blew past Wall Street expectations on the back of record iPhone sales earlier this week, and the company gave a strong revenue forecast, sending its shares to an all-time high.
The smartphone market continued to expand through the economic downturn. Research firm Gartner has forecast it will grow a whopping 46 per cent this year.
Nokia is benefiting from growth among cheap smartphones, with analysts at Goldman Sachs estimating Nokia has a 70 per cent market share in that segment.
Average price of a Nokia smartphone dropped 17 per cent from the previous quarter to just 155 euros (Dh764).
Underlying first-quarter earnings per share rose 40 per cent from a year ago.
Competition
Firm cuts handset prices
Nokia has slashed prices of its cellphones across its portfolio this week, with the deepest cuts of around 10 per cent seen for some smartphone models, data seen by Reuters showed yesterday.
Nokia is struggling to battle with new rivals Apple and Research in Motion at the high end of the cellphone market, and sees a cheaper price as its strongest weapon to hold on to market share, analysts said.
The company has also delayed the renewal of its Symbian software — seen as crucial to improve its position in the high-end of the market — to the second half of the year from second quarter, two sources with direct knowledge of the delay told Reuters.
Rumours of the possible delay have made the rounds for days and analysts see this hurting Nokia's outlook for the second quarter. A Nokia spokesman declined to comment.
Nokia has previously said price changes are part of its normal, ongoing business. The world's top cellphone maker usually cuts prices across its portfolio a few times each year. The deepest price cuts were seen in some of Nokia's E-series models as the firm makes room in its portfolio for new, cheaper models to roll out in coming months.
— Reuters
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