The company posted a massive loss
Nokia, the world's biggest mobile phone maker, reported a much worse-than-expected first quarter loss Thursday as it presses ahead with an extensive restructuring of its faltering business
Nokia issued a profit warning last week but the net loss of 929 million euros ($1.2 billion) in the first quarter of the year was far beyond the loss of 554 million euros expected by analysts polled by Dow Jones Newswires.
Sales fell 30 percent on a 12-month comparison to 7.35 billion euros but this figure was in line with analyst forecasts.
"We are navigating through a significant company transition in an industry environment that continues to evolve and shift quickly," Nokia chief executive Stephen Elop said.
"Over the last year we have made progress on our new strategy but we have faced greater than expected competitive challenges," he said.
The Finnish company is undergoing a major restructuring, phasing out its Symbian smartphones in favour of a partnership with Microsoft that has produced a first line of Lumia smartphones.
Nokia is counting on the new phones to help maintain its ranking as the world's number one but it is operating in a rapidly changing landscape with RiM's Blackberry, Apple's iPhone and handsets running Google's Android platform taking growing bites out of its market share.
Elop said sales of Lumia smartphones in the United States had exceeded expectations but had been disappointing in other markets such as Britain.
In the quarter, Nokia posted an operating loss of 1.34 billion euros, almost double the loss of 731 million euros expected by analysts.
Nokia shares fell a sharp 3.7 percent in late afternoon trade while the broader Helsinki market was up 0.9 percent.
Despite the pressure on Nokia smartphone sales, analyst Ari Hakkarainen at Andalys consultancy said that the early signs of success in the United States were a reason for optimism.
"If they succeed this year with Lumia in the US, it will have a very positive effect, also outside the United States," the analyst said.
But with overall sales still flagging, Nokia announced in a separate statement that Colin Giles, executive vice president of sales and a member of the Nokia leadership team, would leave the company effective June 30.
Nokia said it was restructuring the sales team by removing a layer of management "to ensure greater customer focus" and provide senior executives a "greater visibility into market dynamics."
Pohjola Bank analyst Hannu Rauhala said Nokia had little choice than to stick with its turnaround plan.
"Nokia has chosen this Windows strategy and smart phone so they have got to stay with it to the end ... They are now executing this strategy. It's not complete yet. So we have to wait till the end of this year," Rauhala said.
Nokia said Thursday it was launching the top-of-the-line Lumia 610 in Asia next week in what is to be a crucial test.
On Monday, international ratings agency Moody's downgraded its ratings for Nokia owing to poor prospects for sales.