“Dark days” for Nokia as profit slumps once more

Nokia reported its third profit fall in a row and warned of a weak start to 2011 as it lost yet more ground in the all-important smartphone market.

Nokia said first quarter operating profit margin at its phone unit would drop to 7-10% this quarter from 11.3% last quarter.

Despite being the the world’s leading handset maker by volume and sales, Nokia has lacked a hit smartphone since the N95, which it launched in 2006 before Apple stormed onto the market.

The industry changed, and now it’s time for Nokia to change faster

Nokia’s share of the smartphone market fell to 31% in the fourth quarter from 38% in the previous quarter.

“Growth trends in the mobile devices market continue to be encouraging,” admitted CEO Stephen Elop, who joined the company from Microsoft last year. “Yet, Nokia faces some significant challenges in our competitiveness and our execution. In short, the industry changed, and now it’s time for Nokia to change faster.”

Nokia’s declining smartphone market share wasn’t the only concern, as its sales across the wider handset market also slid 10% from a year ago.

“Even more dramatic than the share loss in smartphones is the slide in market share in standard phones,” said analyst Nicolas von Stackelberg from Macquarie Research. “It seems to be affected by a massive attack in the lower price tiers, in the non-smartphone business.”

Elop said the firm would unveil a revamp of its strategy on 11 February.

“These results point to the daunting task ahead of Elop in 2011,” Geoff Blaber from CCS Insight said. “Disappointing total volume, including smartphones, emphasises that these are dark days for Nokia.”

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