Nokia shares tumble on sales warning

Nokia, the world's biggest mobile phone maker, surprised financial markets yesterday with a profits warning to accompany its first quarter trading statement.

Nokia, the world's biggest mobile phone maker, surprised financial markets yesterday with a profits warning to accompany its first quarter trading statement.

The company said it was losing market share while sales would be below its previous guidance and earnings per share would be at the bottom of its expectations. Its shares fell 16 per cent in New York, sending shockwaves through the technology sector and knocking the shares of leading suppliers to Nokia, such as microchip makers Texas Instruments.

Fears that Nokia has been losing out to Far Eastern competitors, such as Samsung, were confirmed by Jorma Ollila, the chief executive of the group when he revealed that sales and operating profits had been hit. "The overall Nokia sales were negatively impacted because we were not able to fully exploit the usual seasonal market pick-up in March," he said.

Total volumes of handsets shipped by Nokia in Q1 were up 19 per cent but the market grew 25 per cent. At the same time the value of these sales slipped because the company has been selling too many entry-level handsets.

The company said net sales for Q1 would be about €6.6bn, a 2 per cent decline compared with the 3-7 per cent increase that the company had been expecting. It said it still expected to meet its earnings per share figure but only at €0.17 per share.

Nokia said it had seen falling sales in Europe and Asia and blamed gaps in its product portfolio for the decline. Analysts believe Nokia has been trying to fight on too many fronts.

Neil Mawston, of Strategy Analystics, said: "Nokia may be concentrating on too many areas in one go, shifting a lot of resources to the market for CDMA-based phones but taking its eye off the GSM market."