Nokia tells investors that 2011 and 2012 will be 'transition years'
Wondering how long it will take for Nokia to fully execute on its new strategy? Here's a clue in a press release targeting investors and financial analysts:
"Nokia expects 2011 and 2012 to be transition years, as the company invests to build the planned winning ecosystem with Microsoft. After the transition, Nokia targets longer-term: (1) Devices & Services net sales to grow faster than the market. (2) Devices & Services non-IFRS operating margin to be 10% or more."
There are many ways to interpret this, naturally. But the one we can't get our minds around is that the Symbian and MeeGo houses were such a mess that they couldn't be repaired by 2012, even after years of effort and huge investments directed towards that goal. And here we thought that MeeGo "inspired both confidence and excitement" while Symbian's only issue was UI related.
Update: Stephen Elop says that he expects Nokia to ramp up the transition this year and be ready to ship Windows Phone 7 devices in significant volume in 2012.
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Nokia provides financial targets and forecasts linked to new strategy
Nokia Corporation
Stock exchange release
February 11, 2011 at 9.30 (CET +1)
London, UK - Nokia today outlined a new strategic direction, including changes in leadership and operational structure to accelerate the company's speed of execution in a dynamic competitive environment. In connection with this new strategic direction, Nokia has set new financial targets and forecasts for Nokia and the mobile device industry and for Nokia Siemens Networks and the mobile and fixed infrastructure and related services market.
Targets and forecasts for Nokia and the mobile device industry
Nokia expects attractive mobile device industry revenue growth in 2011 and over the longer-term, driven by the further adoption of smartphones by consumers globally and the further adoption of mobile devices and services, particularly in emerging markets. Over the longer-term, Nokia expects mobile device industry gross margins to come under pressure due to competitive factors.
Due to the initiation of Nokia's strategic transformation on February 11, 2011, the full-year prospects for its Devices & Services business are subject to significant uncertainties, and therefore Nokia believes it is not appropriate to provide annual targets for 2011 at the present time. However, Nokia expects to continue to provide short-term quarterly forecasts to indicate its progress in the company's interim reports as well as annual targets when circumstances allow it to do so.
Nokia expects 2011 and 2012 to be transition years, as the company invests to build the planned winning ecosystem with Microsoft. After the transition, Nokia targets longer-term:
- Devices & Services net sales to grow faster than the market.
- Devices & Services non-IFRS* operating margin to be 10% or more.
Targets and forecasts for Nokia Siemens Networks and the mobile and fixed infrastructure and related services market
Nokia and Nokia Siemens Networks expect overall industry revenue to grow slightly in 2011, compared to 2010. While growth is expected in certain areas, such as mobile broadband and services, this is expected to be offset to some extent by declines in certain areas and a continued challenging competitive environment.
Due to Nokia Siemens Networks' solid position in industry growth areas, Nokia and Nokia Siemens Networks target:
- Nokia Siemens Networks net sales to grow faster than the market in 2011.
- Nokia Siemens Networks non-IFRS* operating margin to be above breakeven in 2011.
Additionally, Nokia and Nokia Siemens Networks continue to target Nokia Siemens Networks to reduce its non-IFRS* annualized operating expenses and production overheads by EUR 500 million by the end of 2011, compared to the end of 2009.
* Non-IFRS results exclude special items for all periods. In addition, non-IFRS results exclude intangible asset amortization, other purchase price accounting related items and inventory value adjustments arising from the formation of Nokia Siemens Networks and from all business acquisitions. Nokia believes that these non-IFRS financial measures provide meaningful supplemental information to both management and investors regarding Nokia's performance by excluding the above-described items that may not be indicative of Nokia's business operating results. These non-IFRS financial measures should not be viewed in isolation or as substitutes to the equivalent IFRS measure(s), but should be used in conjunction with the most directly comparable IFRS measure(s) in the reported results.
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