Nokia Sales Estimates Down, Thanks To Microsoft Upgrade Policy

Japanese financial company Nomura Holdings has lowered the revenue estimates for Nokia handsets from €10.9 billion to €6 billion for 2013, after Microsoft announced that Windows Phone 8 will not be compatible with older Lumia models.

In April, Nokia had to downgrade its profit outlook for 2012 from “breaking even” to three percent in the red. This week, the troubled Finnish manufacturer announced restructuring measures that will lead to closure of the factories in Finland, Germany and Canada, and the loss of 10,000 jobs.

The company is also selling its Vertu luxury division to the private equity firm EQT VI.

Tough times

Nomura Holdings has predicted that next year, Nokia will sell 34 million devices running Windows Phone, 41 percent less than previously thought, reports Bloomberg.

Nomura also cut its share-price estimate on Nokia from €3.20 to €2, while maintaining a neutral recommendation on the shares. This year, Nokia stock has already lost 49 percent of its value.

Microsoft said this week that the new Windows Phone OS will be released before the end of the year, but the current Windows Phone 7 devices will not be able to upgrade. Instead, they will be offered an updated version of the existing software, featuring a new home screen.

Last year, Nokia made a choice to abandon its Symbian OS to focus on partnership with Microsoft. However, the transition didn’t go smoothly. There were problems with marketing, and some shareholders even decided to take the company to court, claiming it “misled” the investors by converting to a Windows platform.

“We had hoped that Q3 would represent the low point in Nokia’s competitive cycle,” the analysts wrote. “An abandoned strategy in feature phones combined with an apparent increase in competitive pressures in Windows Phone lead us to cut revenue estimates that the recent restructuring announcement does not fully offset.”

And yet, at the Windows Phone Summit on Wednesday, many developers were optimistic about the new OS, and expressed confidence in Nokia’s ability to grow sales of Windows Phone devices.

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