Nokia’s smartphones struggle to set the right tone

Pressure mounted on Stephen Elop yesterday as Nokia reported disappointing sales of its new range of smartphones.

The Finnish company said that it sold 7.4 million Lumia phones in the three months to June 30, up 32 per cent from the first quarter but fewer than the 8.1 million predicted by analysts.

Mr Elop, a former Microsoft executive who decided to base Nokia’s smartphone range on the Windows Mobile platform, said that the entry level Lumia 520 had made a strong start in markets including Britain, the United States, China, France and India.

“During the third quarter we expect that our new Lumia products will drive a significant part of our smart devices revenue,” he said.

Sales of regular mobile phones, which still account for more than half of the company’s device revenues, were also weaker than expected. They fell to 53.7 million, 4 per cent down on the previous quarter and short of analysts’ forecasts of 56.2 million.

Overall sales for Nokia fell by 3 per cent to €5.7 billion (£4.9 billion).

The company’s shares closed down 2.8 per cent at €3.01 in Helsinki, valuing the company at €11.2 billion. The stock has fallen by 82 per cent over the past five years.

Mikko Ervasti, analyst at Evli Bank in Helsinki, said: “The work with Lumia is still challenging, although there has been some progress. But they have to pick up the pace, as in mobile phones they have large volumes they may lose.”

Michael Walkley, a Canaccord Genuity analyst, said: “The concern is that the high-end smartphone market looks weak across the board, whether it be weak numbers from HTC or BlackBerry, or Samsung coming in lower than expected. That’s going to make it tough for Nokia and Lumia volumes.”

Profitability rose at Nokia Siemens Networks, a formerly troubled joint venture with Siemens that Nokia agreed to take full control of this month.

Its operating margin rose to 11.8 per cent from 7 per cent in the first quarter, which put an even better complexion on the €1.7 billion deal that Nokia had struck.

Net sales at the joint venture by fell 1 per cent quarter-on-quarter to €2.8 billion.