Investors back the Finnish giant’s plans to fight back with phones that take on both Blackberry and the iPhone
Despite its worst quarter in more than a decade, the world’s largest cell phone maker thinks the worst of the global financial meltdown is over, and announced plans for devices that combines a touch screen and a qwerty keyboard.
Nokia has reported its worst quarterly performance in more than a decade, with profits down by 90 percent – but the company says the worst of the recession is over. Investors appear to agree, with the share price actually rising, by 9.2 percent, to 11 euros – a massive fifty percent up during the course of March.
The reasoning is that Nokia’s business is still huge – unit sales only fell by a lesser figure of 18 percent as consumers cut back, and operators spent less on their networks. The company says it has now reduced the amount of stock it has in its sales channels, and future quarters will be more normal.
“The inventory already in the sales channels decreased substantially during Q1 due to extensive destocking by operators and distributors,” Nokia CEO Olli-Pekka Kallasvuo said in a statement. “This adversely impacted our sales volumes in the quarter. However, it has also resulted in the demand picture becoming more predictable as we enter the second quarter.”
All eyes are on the company’s future plans, with more qwerty-keyboard phones expected, to compete with RIM’s Blackberry and similar devices, as well as touch-screen phones to pitch against Apple’s iPhone. In a phone briefing to journalists, Kallasvuo said the company will “renew our portfolio meaningfully,” and promised to “cover more Qwerty and touch, and the combination of the two,” in mid-range and high-end phones to be launched by the end of the year.
These would be more affordable phones, alongside the high-end N97, announced at the end of 2008, which is billed as a “the world’s most advanced mobile computer”.
“The lower sales volumes for Nokia and the industry, both year on year and sequentially, were primarily driven by the negative impact of the rapidly deteriorating global economic conditions, including weaker consumer and corporate spending, severely constrained credit availability and unprecedented currency market volatility,” Nokia said in a press release.
While not predicting that the cell phone market has hit the bottom of the slump, Nokia CEO Olli-Pekka Kallasvuo said ongoing sales should be more predictable for the rest of the year.
Nokia said it anticipates second-quarter sales volume to be flat or slightly up from the first-quarter results. Overall, Nokia stuck with its prediction that sales will be off 10 percent for 2009.