Nokia said the adjusted operating margin for Devices & Services will be the same or worse in Q2, due to similar market effects, as well as the weaker economic climate and the timing and demand for new products. In addition, it had a one-time positive effect from lower warranty costs in Q1, which will not recur in Q2. CEO Stephen Elop said the results show the company is still in a transitional period. Nokia will focus on building momentum for the Lumia phones, investing more in bringing the devices more quickly to market in more countries. For feature phones, the company plans "tactical pricing actions" and new product launches in Q2.
The company sold over 2 million Lumia devices in Q1, at an average price of EUR 220. It last reported over 1 million units sold as of late January. Total smartphone sales reached 12 million units in the three months to March, for revenues of EUR 1.7 billion, while sales of traditional phones numbered 71 million in Q1, with revenues of EUR 2.3 billion. Nokia said inventories were at the high end of its usual 4-6 week range, but in absolute numbers were down compared to end-2011. The gross margin at Devices & Services was 25 percent in Q1, on total sales of EUR 4.2 billion, with the Mobile Phones margin at 26 percent and Smart Devices falling to 16 percent.
Nokia Siemens Networks met its first-quarter outlook for an adjusted operating margin of around negative 5 percent. The network equipment company contributed positive cash flow, and the Nokia group ended March with net cash of EUR 4.9 billion. Nokia will report full quarterly results on 19 April.
