NOKIA’S shares plunged by almost four per cent yesterday after the struggling Finnish phone maker reported a €1.34bn loss in its first quarter and announced its head of sales is preparing to leave.
The Helsinki-based company said that “greater than expected competitive challenges and seasonality” drove operating profit into the red, from a €439m gain in the same quarter last year.
Nokia also announced yesterday that its executive vice president of sales, Colin Giles, will leave the company in June after working there for 20 years.
Giles has been based in China, which a year ago accounted for over a quarter of Nokia’s income and where device sales fell 70 per cent in the quarter to €577m.
Group sales fell 29 per cent to €7.35bn as the number of mobile phones sold dropped 32 per cent to 2.3bn and operating margins plummeted from 10.3 per cent last year to a negative -5.2 per cent.
Nokia’s dismal results come just days after Moody’s downgraded the Finnish company’s debt rating to Baa3, just one level above “junk” status.
Nokia chief executive Stephen Elop – whose salary was tripled to €1.02m last year while the phone company’s pre-tax profits dropped from €1.79bn a year earlier to a €1.2bn loss – said the company is “navigating through a significant company transition in an industry environment that continues to evolve and shift quickly.”
He added: “We have a clear sense of urgency to move our strategy forward even faster” and said that Nokia would focus its efforts at the low end of smartphones.
The company, whose stock tumbled to its lowest closing price in 15 years after issuing a profit warning last week, said it will announce details of further cost cuts “as quickly as possible”.
Shares closed 3.7 per cent lower yesterday at €2.92.