Nokia posted a 25-percent uptick in its first-quarter profits, and reiterated its expectation that mobile handset unit shipments would rise by 10 percent globally this year.
“We had strong profitability, even with the seasonal drop in sales,” Nokia CEO Olli-Pekka Kallasvuo told investors. “The overall device market developed as expected, with the greatest demand in emerging markets, where our position is very strong.”
However, Nokia’s $1.94 billion profit failed to live up to Wall Street expectations. Moreover, investors were less than pleased about certain aspects of the company’s outlook for the remainder of this year.
Currency Woes
Kallasvuo attempted to downplay Nokia’s expectation that the mobile device market would decline in value this year due to the negative impact of the recently weakened U.S. dollar. “In fact,” he said, “the market is expected to clearly grow in value terms on a constant currency basis, according to our estimates.”
Kallasvuo also noted a downside to the fact that the mobile market this year looks similar in many ways to 2007 — when industry growth was driven by sales in emerging markets such as India, China, Brazil and Africa. Because of this, Nokia expects to see some decline in industry-average selling prices this year, “primarily to reflect the increasing impact of the emerging markets, and competitive factors in general,” Kallasvuo explained.
For its part, tech research and advisory firm Gartner sees the looming recession in Western Europe and North America — together with increased food prices in emerging markets — possibly impacting the overall value of the mobile device market. “This means that in mature markets, consumers might be choosing mid-tier devices over high-end devices,” noted Carolina Milanesi, Gartner’s research director.
“We were expecting replacement sales in emerging countries to famously impact average selling prices (ASPs), possibly offsetting the trend in mature markets,” Milanesi…