Nokia Cuts its Handset Sales Forecast
Citing economic issues and price cutting by rivals, Nokia has warned that it expects its Q3 market share for mobile phones to decline from the aprox. 40% the company had in the second quarter of this year.
This compares to Nokia's earlier estimation provided in the second quarter results in July, when the company said it expected its mobile device market share in the third quarter 2008 to be approximately at the same level sequentially.
The company's share price slumped 10% on the news.
During the second quarter, Nokia said that it had shipped 122 million mobile phones, and estimated at the time that the overall industry shipped 303 million mobile phones in the quarter, leaving Nokia with a 40% market share of the mobile phones.
Nokia continues to target an increase in its market share in mobile devices for the full year 2008.
Nokia says that it expects the overall mobile device market in 2008 to be impacted by the weaker consumer confidence in multiple markets. However, Nokia continues to expect industry mobile device volumes in 2008 to grow 10% or more from the approximately 1.14 billion units Nokia estimated for 2007. Nokia also continues to expect industry mobile device volumes in the third quarter 2008 to be up sequentially.
Nokia's current estimate that its mobile device market share in the third quarter 2008 will be lower than previously expected is due to multiple factors. These factors include Nokia's tactical decision to not meet certain aggressive pricing of some competitors, the overall market competition, including the entry markets, and the temporary impact of a slower ramp-up of a mid-range Nokia device. Nokia reiterated that its strategy is to take market share only when the company believes it to be sustainably profitable in the longer term. Nokia has not broadly participated in the recent aggressive pricing activity - as it believes that the negative impact to profitability would outweigh any short term incremental benefits to device unit sales.
"We expect the product launches and start of shipments to be on track during the remainder of the third quarter and the fourth quarter 2008. Driven by its new products and services, Nokia continues to believe its product portfolio will be very attractive for the rest of the year." the company added in a statement.
Nokia will report its third quarter 2008 results on October 16, 2008.
Posted to the site on 5th September 2008
