Decrease in quarterly earnings from Nokia, the DG under pressure
Nokia reported a sharp drop in earnings in the second quarter, increasing a little more pressure on his ailing CEO, Olli-Pekka Kallasvuo.
The Finnish group, which manufactures mobile phones sold in three in the world, proceeded to the quarter two profit warnings and a reshuffle of his leadership when he barely keep pace with Apple in the smartphone.
We learned this week that Nokia sought a replacement for Olli-Pekka Kallasvuo, who has spent more than half his life in the company.It could even be removed from duty as this month, The Wall Street Journal.
A Nokia spokesman declined to say after the publication of results if the Director-General retained the support of the board of directors.
Aged 57, Olli-Pekka Kallasvuo, who is married to a longtime advocate of Finnish group, has called for an end to the rumors about his departure.
"There have been many rumors about my position on myself, in recent weeks and it is not good for Nokia and should be completed one way or another," he said on TV channel CNBC.
At 13:15 GMT, Nokia shares gained 3.2% to 7.215 euros while the Stoxx 600 index of European technology stocks took 1.5%.
"The issue of change management is more important for the course of action that results in time," said Thomas Langer, an analyst at WestLB.
Competition intensifies
Earnings per share excluding exceptional items fell 27% as expected to fall to 0.11 euros per share.
Nokia had warned June 16 that sales and profits of its mobile division would be lower than what was previously anticipated, the group has been forced to sharply reduce its prices to meet competition from the iPhone Apple and phones using Google's operating system.
Olli-Pekka Kallasvuo, who is known as "OPK" within the group, said that Nokia was counting on the N8, its first phone using the new Symbian software, which should give users a superior experience for all other smartphones until been manufactured by the company.
"OPK said that the N8 will bring the best user experience ever experienced with Symbian.This is good but what about this experience unmatched by the competition? That's what matters and we do not think it will be enough, "said Carolina Milanesi, analyst at Gartner.
Nokia said its operating margin on its mobile phone division fell to 9.5% in the second quarter and warned that this trend may continue in the third quarter.
In this case, the group expects a non-IFRS operating margin of its mobile division and service of between 7% and 10% the third quarter of 2010.Nokia also expects that its market share by volume remained stable in 2010 compared to last year.
"What is slightly worrying is the margin guidance for Q3 (…) Now, everything depends of the fourth quarter. Competition is intensifying," said Kulbinder Garcha from Credit Suisse.
The N8, which should be commercialized at the end of the current quarter, will compete with Apple's latest iPhone and google-phones "Samsung and Sony Ericsson in the fourth quarter, which is strategically with the Christmas holidays.
Nokia shares tumbled about 20% since the beginning of the year, sharply underperforming the index of technology stocks which gained 7%.
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