Nokia To Make Cuts After Huge Drop In Sales

Struggling mobile phone maker Nokia has pledged to make substantial cost cuts after posting a bigger than expected loss for the first quarter of 2012.

The Finnish company reported a net loss of 929m euros (£760m) for the first three months of the year as it continues to be hit by strong competition in the smartphone market.

The first quarter losses were far greater than analyst expectations of around 554m euros (£453m) and came after Nokia issued a profit warning last week .

Over the same period in 2011 it made a profit of 344m euros (£281m).

In the first quarter of this year revenue slumped by 30% to 7.4bn euros (£6.1bn), from 10.4bn euros (£8.5bn) a year earlier.

Net sales of devices fell by 40%, while smartphone sales fell by more than half.

Nokia said it sold 83 million mobile devices in the quarter, down from 108 million in 2011.

Chief executive Stephen Elop said sales results of its new Lumia phones, which it had hoped would help win back smartphone customers from Apple and Samsung , have been mixed.

"We exceeded expectations in markets including the United States, but establishing momentum in certain markets including the UK has been more challenging," he said in a statement.

The company said it would speed up plans to reduce its costs by a billion euros by 2013, promising to give "further details as quickly as possible."

The once pioneering mobile phone-maker warned on April 11 it would post losses in the first two quarters of this year as sales of its new Lumia phone, the first to use Microsoft Windows, failed to offset shrinking sales of older models.

Nokia has faced increasingly stiff competition in the smartphones market, where it has increasingly lost ground to Apple's iPhone , which has doubled its market share, and Samsung , which has just overtaken the firm in the Chinese market.

Despite its troubles Nokia remains the world's largest manufacturer of mobile phones by volume, thanks mainly to sales of handsets in China, which has become one of the hottest markets for smartphone makers.

In its latest trading announcement, the company said it was restructuring its sales team and that Colin Giles, executive vice president of sales, would leave the company in late June.

Ben Wood, head of research at CCS Insight, said: "There needs to be a meaningful turnaround in the second half of the year or serious questions will be asked about Nokia's future."