Nokia prepares market for 'disappointing' Q1 result

Finnish mobile phone maker Nokia has issued a warning that its financial report next week will be ‘disappointing’, as the company works to accelerate out of its ‘transition phase’ on the back of the Windows Phone-based Lumia range.

Two million Lumia devices were sold around the world in the first quarter of 2012, Nokia says, double the number sold in the final quarter of 2011. Activations have grown sequentially every month since November last year, and the Windows Phone ecosystem is attracting developers, with over 80,000 applications now available.

However, that hasn’t stopped Nokia from forecasting a 3% loss in its non-IFRS operating margin for its devices & services segment, compared to previous advice that the company would break even.

The result in the second quarter is expected to be the same, meaning it could be the second half of the year before Nokia starts seeing the benefits of its Lumia launch.

Stephen Elop, president and CEO of Nokia, says the results show the company is still squarely in the middle of its transition period.

"Within our Smart Devices business unit,” Elop says, "we have established early momentum with Lumia, and we are increasing our investments in Lumia to achieve market success.

"We are continuing to increase the clock speed of the company. The change is tangible, and we are proud of the way Nokia employees are quickly responding to the needs of consumers and partners.”

The result won’t have been helped by the Lumia launch hitting its first snag yesterday, with the discovery that a software error in the flagship Lumia 900 (not on sale in New Zealand) was in some cases causing a loss of data connectivity.

Nokia is rushing to update the devices, and will be hoping nothing else goes wrong over the next few months.