Nokia cuts market share targets as Q2 profits plummet

Ok Nokia, this is getting serious. The world's largest cellphone maker just announced a 66 percent yearly drop in Q2 profit while lowering its 2009 market share target for its cellphones. Originally, Nokia had expected market share to rise in 2009, presumably based on a successful launch of the N97 flagship device. However, outside of a core group of S60 diehards, the N97 has been universally panned in both reviews and user forums alike. And with nothing but rumors of an Atom-based Nokia netbook on the immediate horizon, well, let's just say that we're suddenly concerned about the health of our friends from Espoo.

[Eric @ Jul 16th 2009 6:59AM]

Oh Thomas, Thomas....
Don't try to be stock expert, you're not.

[phone] Euros. Growth in market share. Etc. Etc.
Somehow Mr. Ricker forgot these facts.

[Calpa @ Jul 16th 2009 7:07AM]

But it's pretty much the future that's important for invenstors.. so if the graph goes down, even though they're still profitable, the company will too.

[Eric @ Jul 16th 2009 7:17AM]

That is true.
I'm just trying to make sure that everything is put into perspective.
And why didn't Mr. Ricker post SE results with nicely photoshopped graphics? They are much worse and released couple hours before Nokia results. Maybe because Mr. Ricker likes to beat Nokia.

It seems that these "journalists" like to beat Nokia every time they have a chance. Nokia may have problems but they do have a clear strategy (Symbian + Maemo + Qt) and frankly I don't think they deserve to be beaten so much. Once again they managed to pull out a better result than analysts expected. And so what if market share stays flat in H2, it's still fricking ~40%.

[Mark Anderson @ Jul 16th 2009 7:34AM]

So, just so we understand each other, Thomas...

Nokia's Q1 profits were down 90% in Q1. A decrease of YoY profits in Q2 of 66% is pretty horrible but is this:

a) Better than Q1, representing a recovery trend
b) Indiciation that they should just shut up shop

Oh and how have their competitors - in all sectors of the market, smart, feature and dumb - fared?

Earnings per share were 01.5 Euros beating the average analysis estimate of 0.13. Is this:

a) A sign that things are improving for Nokia?
b) Indication that they should just shut up shop?

An analyst commented:

"Amid the doom and gloom Nokia have delivered some excellent results ... Nokia's high-tier performance continues to be the biggest concern," said CCS Insight analyst Geoff Blaber.

Is this:

a) A sign that things are improving for Nokia?
b) Indication that they should just shut up shop?

Now don't get me wrong - the N97 is a mis-step and they need to re-evaluate their strategy. The 5800 on the other hand is a monster hit and the featurephone market seems pretty solid.

I await your response.

[Pre-determined @ Jul 16th 2009 8:30AM]

past performance is no guarantee of future results

to say that should be in the forethought of every investor is an understatement... therefore profits down marginally less over the previous quarter are heavily overshadowed by future expectations and targets. the words "down" and "lower" don't inspire action unless its pertaining to costs and liabilities. The N97 should be a wake-up call for Nokia...when it comes to high-end phones...come hard or don't come hard at all. Nokia's "flat" (uninspiring to any investor from going long to short) market share is built upon their low-to mid level offerings along with their strong european following. As an investor I would like to see a concentration on core strengths during turbulent times like now. Nokia is slowly reminding me of the journey Motorola has taken...allowing other innovative manufacturers one-up you at every turn. And sometimes its not even that... a 3-row qwerty keyboard on your flagship? Unacceptable when kiddie texters slide out with 4 rows and your competition has 5 rows standard (HTC TP & TP2). If I look at it from an average consumer standpoint, when I hear Nokia... dumbphones and phones that play games is what immediately comes to mind. To see steady growth, I think Nokia has work to do in order to change anyone with that mindset. On the investor side, I dont see Nokia even remotely attractive to me until the $9-11 range going long. Misrepresent yourself in the sector with this netbook campaign and your stock price just might have me pull the trigger.

[Return of Jackson...whoo! @ Jul 16th 2009 6:59AM]

Time to gloat Chapelle!, your iPhone is the doom bringer

We need to get you your own show... the iChapelle show!

[bolmedias @ Jul 16th 2009 7:01AM]

The iPhone is the doom-bringer. That's the best thing I've heard all day.

[ProfessorKaos @ Jul 16th 2009 7:24AM]

If your gonna rip on Paul A. Chapel , at least spell his name right XD Shame...

[Linhares @ Jul 16th 2009 7:25AM]

Nokia should buy Palm and get some decent software. There; I said it.

[LondonConsultant @ Jul 16th 2009 7:40AM]

If the iPhone is the doom-bringer, then Android is the salvation-bringer. Nokia needs to jump on the Android bandwagon soon - before its left trailing in the smartphone market...

[Tim Brown @ Jul 16th 2009 8:23AM]

Or just shorten his name to iPaC, I think he would like that one more

[Aaron @ Jul 16th 2009 8:43AM]

Nokia's smartphone share stayed steady (vs Q2 2008) or actually increased 3% (vs Q1 2009).

So it's neither Apple nor Android that's "killing" Nokia.

[iphonerulez @ Jul 16th 2009 8:59AM]

Over the past six months Nokia stock has had a rough ride and currently it doesn't show any signs of a turnaround. The overall handset market is really weak except for smartphones, therefore Nokia is bleeding cash selling handsets to the poorer nations. The only problem is that Nokia's high-end smartphones are just not geared for the average newbie user. Symbian seems to be showing its age. It appears that Nokia will continue to lose smartphone market share for at least another year.

http://www.google.com/finance?q=NYSE:NOK This clearly shows the stock is currently heading in the wrong direction.

[Aaron @ Jul 16th 2009 9:20AM]

@iphonerulez
"therefore Nokia is bleeding cash selling handsets to the poorer nations"

Where are you getting this information from? Nokia made a $300 million PROFIT. Check their results - they're a cash positive company.

"It appears that Nokia will continue to lose smartphone market share for at least another year."

Where are you getting this information from? Nokia maintained market share vs. Q2 2008 and GAINED market share vs. Q1 2009.

Are you one of the Engadget writers? You're drawing conclusions without checking the facts.

[Quix @ Jul 16th 2009 11:12AM]

Good grief, even when Paul Chapel isn't here all you can talk about is Paul Chapel.

Move on, people. Your hatred for Apple is being outplayed by your hatred for Paul Chapel.

[macserv @ Jul 16th 2009 3:11PM]

"...Whenever Paul A. Chapel's not onscreen, all the other characters should be asking 'Where's Paul A. Chapel?'"

[biggwill @ Jul 16th 2009 6:40PM]

READ THE FULL STORY VIA THE LINK.... NOKIA FORETASTED A RISE... NOW ITS EXPECTS IT TO BE THE SAME AS LAST YEAR.. ITS NOT EXPECTING TO LOSE MARKET SHARE, ITS EXPECTING IT TO BE THE SAME.

COME ON ENGADGET... I KNOW YOU LIKE TO ENCOURAGE DEBATE BUT MAKE THINGS A BIT CLEAR INSTEAD OF POSTING A PICTURE AND A SHORT DESCRIPTION THAT YOU NEW FULLY WELL THAT PEOPLE (MAINLY THE VERY LOAD iPHONE FANS) MIGHT TAKE TO TO IMPLY SOMETHING TOTALLY DIFFERENT...

THE MOBILE PHONE MARKET IS TOO DIVERS FOR ONE PLAYER TO RULE ALL...
WE HERE ARE GEEKS AND THE ORDINARY MAN AND WOMAN ON THE STREETS SEE MOBILE PHONES DIFFERENTLY TO US.

I NEVER REALLY COMMENT BUT I THOUGHT I HAD TO COMMENT ON THIS POST..

I AM NOT A NOKIA FAN, I AM A MOBILE PHONE NUT... LOVE MY E71 AND N86, HTC TOUCH HD AND MY iPHONE 3G

HEY DON'T HATE ME, HATE THE COMPANIES. TOOO MANY GOOD GOOD PHONES FOR FREE ON CONTRACT (in the UK)

[biggwill @ Jul 16th 2009 6:44PM]

Hate this bloody auto correction on my TOUCH HD

[bolmedias @ Jul 16th 2009 6:59AM]

Why so butthurt, Nokia? You have profits. PROFITS. Yes, you have less profit, but you have still MADE MONEY. That's an achievement in the current times.

[Return of Jackson...whoo! @ Jul 16th 2009 7:03AM]

My THRILLER album still makes money.. big whoop!

[johnny5 @ Jul 16th 2009 9:48AM]

Unlike Palm to this point. Talk about bleeding money...

[Imran @ Jul 16th 2009 7:02AM]

Sad, I was one of those die hard Symbian fans for the last 5 years but now I'm jumping ship and getting a HTC Hero, maybe with the release of Symbian^2/3 they can pull things back.

[bolmedias @ Jul 16th 2009 7:05AM]

Good man.

Without wanting to sound all 'ANDROIDFTW', I'm a G1 owner, and I've seen Android's potential first hand. Plus, having hacked my G1 and actually used Sense UI, I can tell you that it's something to look forward to for sure.

[Imran @ Jul 16th 2009 7:11AM]

Android is the only OS that's made me feel the way that S60 made me feel when I first tried it out 5 years ago! Until the iPhone gets some multi-tasking ability I'm staying away from it, no matter how enticing it looks! Back when the N97 was first announced and people were saying N97 hardware+Android=win, I was highly doubtful, but now.... Hummm.

[Calpa @ Jul 16th 2009 7:12AM]

bolmedias
bolmedias @ Jul 16th 2009 7:05AM
Whereas I own an iPhone (which of course is ftw.. but w/e), I was pleasantly surprised when I tried out an Android device in the store the other day.. Even in it's default form it functions way better than what Nokia has come up with recently software-wise. Nokia is falling behind rapidly; iPhone OS and Android have raised the bar... and if Nokia doesn't hire some new software-geeks, they will loose more than 66%...

[Rob Bourne @ Jul 16th 2009 7:12AM]

I was about to come and say the same thing. I bought the 5800 and enjoyed it, but it wasnever going to be around long as I really wanted the N97 but was too impatient and wanted a touch S60 phone.

I sold it and, after buying and getting bored of a Tocco Ultra and C905, I went for a G1 - a phone I've long been interested in but never gone for. Mainly because I'm not on T-Mobile.

Now that I've experienced Android, and seen what it's capable of (I haven't rooted or upgraded mine yet, but I'm seriously considering it), S60 - and consequently the N97 - mean nothing to me anymore.

Now I'm not saying Android is the sole reason that Nokia are 'suffering', but it's one of the key players showing the consumer that Nokia, while still a great brand, don't quite make the best phones anymore.

[Imran @ Jul 16th 2009 7:16AM]

@Rob

Me and you are in the same boat, I bought the 5800 because I wanted an S60 Touch device to keep me busy until the N97 came out, but now... Android is what S60 touch should've been by this point.

[bolmedias @ Jul 16th 2009 7:37AM]

Nokia has an even bigger problem than the S60 OS though: their hardware of late has been poor. The N97 would be brilliant, if it had a capacitive screen, a properly positioned space bar, and a trackball.

[Imran @ Jul 16th 2009 7:45AM]

@Bolmedias

Tbh I think the space bar placement on the N97 is actually quite clever if you use it, also, a trackball doesn't fit in with S60 navigation.

[bolmedias @ Jul 16th 2009 7:52AM]

@Imran: Regarding the trackball thing, it does the same job as a D-Pad, why not use it? I reckon that it could make S60 Smartphones easier to navigate through, especially the 5th Edition. It's the same with Android: you'd be surprised how much the trackball on the G1 helps me use it. And anyway, if you added a trackball to the N97, you could get rid of the D-Pad and make the keyboard a bit wider.

[G @ Jul 16th 2009 10:38AM]

@bolmedias: I recently purchased a Samsung Omnia HD which is a S60 smartphone with a capacitive touchscreen and it's mostly ok. The only problem is when trying to play some java and flash games with tiny buttons, i'd love to have a stylus for those, but i can't because of the capacitive touchscreen. What's supposed to be so bad about resistive touchscreens anyway?


I have never tried a resistive display, so i don't know if they are the same quality or not

[Imran @ Jul 16th 2009 10:55AM]

G makes a good point, capacitive touchscreens are all very nice, but only worth anything if the UI is optimised for them, S60 5th isn't, yet.

[G @ Jul 16th 2009 11:25AM]

no, you misunderstood, the OS itself is perfectly ok for finger-only use.

The problems are Java games which have been made for S60 3rd edition and ported to 5th edition with the minimum of effort (same tiny buttons) and Flash games which were originally made for PCs with computer mice where the size of things you need to click is not important.

Otherwise i haven't had problems with tiny buttons anywhere else, except the browser if you do not zoom in.

[syko21 @ Jul 16th 2009 7:12AM]

Nokia can turn it around if they do what is technically capable at the time like the N95 was a few years ago. Take the best (by best I mean the best they have on their product line) camera available (the 8.1MP from the N82), best keyboard (E71), a capacitive screen (asian markets can learn to draw with their fingers instead of stylus), a chassis built by the same people behind the N97 (despite the fact the phone overall sucks the chassis is solid and well built), and for god sakes UPGRADE THE CPU/RAM my N95 8GB has pretty much the same combo and it was released years ago.

[Nick @ Jul 16th 2009 7:17AM]

Anyone is suprised?

Apple are already making 40% of Nokias profits and seeling a fraction of the number of handsets.

Nokia are over.

Apple will dominate the mobile space for years to come.

None of your ignorant whining can do ANYthing to stop it.

I will enjoy watching you squirm Apple haters!

Carry on!

[Andrey @ Jul 16th 2009 7:44AM]

Paul ?

[G. I. @ Jul 16th 2009 7:46AM]

Stop suckin' Jobs' dick, Mactard.

[10minutehobo @ Jul 16th 2009 8:33AM]

Meh. Only in America.

The rest of the world actually has smart people.

[bandora @ Jul 18th 2009 8:11AM]

@10min: You totally read my mind..

[papari @ Jul 16th 2009 7:18AM]

Nokia's smartphone market share has gone up 3% since Q1...

[Eric @ Jul 16th 2009 7:23AM]

Nokia is still doomed. Trust Gizmodo, Apple fans and Thomas Ricker.
I didn't think I would ever say this: Chris Ziegler, please, keep posting 24/7 so we may have a slight chance against these "Nokia is doomed" guys.

[Renegade Fanboy @ Jul 16th 2009 9:17AM]

And they have finally increased smartphone sales by 23%. I mean it's far from stellar - but they they have increased smartphone sales by 23%!

Not to mention the 5800 selling over 1 million per month nowadays.

[tekdroid @ Jul 16th 2009 7:19AM]

As armchair CEO, I would like to say:
* Hire new designers that don't need to look out and analyse 'market trends' before they even start to design a phone - let the designers some up with something innovative and fresh without marketing getting in the way. Have a team doing this and see whether you can make a product out of it and/or use some of their (original) ideas. Nokia has always been ultra-conservative. Place usability as a high priority.
* Cut faux silver/ chrome trim emissions by 70% this financial year :)
* In a saturated market, I hope Nokia and others realise these things are fast becoming commodities. You can't expect people to get a new phone every year, IMO. Especially now. Where is a nice long-lasting phone that doesn't show premature wear after 6 months of use that gets all that needs to be done and done well? Babying phones, relying on the toss-out-and-rebuy market or relying on those that buy them as a status symbol is a bit...long-in-the-tooth. Sure they'll always exist, but maybe time to change the approach a bit in the different market segments. Make something(s) unique that enhances your brand and image or expect commodity prices.
* On the software side, the Average Joe seems to be taken by touch screens and more intuitive use. I think they need something new and fresh, but I think they know this.
* Today's hint of the day: gloss makes your phone slippery. Reflective surfaces tend to blind you in the sun.

That is all, Mr Nokia.
Armchair CEO signing off for now.
Incidentally I favour small budget phones, so I am not in the market for most of this nonsense, so what would I know :)
Good luck.

[Aaron @ Jul 16th 2009 7:21AM]

Wow, that's some irresponsible reporting!

Market share UP vs. Q1 2009.
Profit UP 600%+ vs. Q1 2009.
Smartphone market share UP vs. Q1 2009.

What are you smoking Thomas? We're in a recesssion and Nokia has rebounded nicely from a tough Q1.

[papari @ Jul 16th 2009 7:24AM]

Those are numbers you're talking about. Thomas can count only apples.

Maybe this ridiculous post by Thomas Ricker should be a wake up call for Engadget. Facts please.

[Rob Bourne @ Jul 16th 2009 7:26AM]

Don't forget, this site is very anti-nokia. They try to hide it, but it still seeps through.

Personally I don't care for Nokia anymore having discovered the joys of Android.

[Nemoi @ Jul 16th 2009 7:25AM]

Mr. Riker, did you actually read Nokia's press release?

- its market share has risen compared to Q1, inter alia selling about 3.7 million 5800 in three months
- it expects its market share to be roughly the same level. That would be quite an achievement considered the competition it is getting in the smartphone market with a crowd of Android phones, the iphone 3GS and the Palm Pre. You, however, make it sound like it's loosing market share at an ever increasing level
- They sold 17 million S60 devices in the three months, so that I guess these must all be 'S60diehards'?

A little less bias would be appreciated.

[roole @ Jul 16th 2009 2:04PM]

Stock down 15% for the day. About $9B in market cap wiped out.

Along with all these clueless engadget reporters, it must be the bias of the stupid US stockmarket against this Finnish phone company -- that still has a great market share, makes a profit, sells a ton of phones, increased it sales of smartphones etc etc -- that led to this market massacre.

/sarcasm

[ProfessorKaos @ Jul 16th 2009 7:26AM]

Yes, but they have to make ENOUGH profits to support, promote, and manufacture to keep this gig up. I am no economics expert but you can make a million profit and still be in trouble, because you cant re-invest that million into your business that takes alot more to expand and run.

[Newone @ Jul 16th 2009 9:02AM]

Research and development expenses 2009Q2 1 458M€ 2008Q2 1 396M€

So Nokia is using more money in research and development this year than last year.