The message in yesterday’s profit warning was stark: profit margins are short of the targeted 6 to 9 percent, and the company has scrapped targets for handset sales and margins. According to the company’s CEO Stephen Elop, the reason is clear – strong competition at the high end of the market.
“Certain competitive forces, particularly Android, are really gaining momentum in certain regions,” Elop told YLE. “For example in China, there is indication of some very substantial movement in the growth of market share for Android, particularly in some technology areas where Nokia today, with our current portfolio, doesn’t compete.”
The announcement caused huge losses on stock exchanges in Helsinki and New York. Nokia’s stock value tumbled to 20 billion euros, down from a high of 100 billion euros in 2007.
Analysts suggested that the losses could not just be explained by the current difficulties – markets were also sceptical about the company’s smartphone strategy, which is now heavily reliant on the US software firm Microsoft.