Nokia and Ericsson’s shares fall

Nokia shares fell as the smart phone maker sold the fewest number of mobile phones in a quarter of eight years as shipments of both top-end smartphones and basic devices disappointed.

The sales of 61.1 million mobile devices in second quarter are highly disappointing comparing to analysts average estimated 63.5. That was the lowest number since it sold 60.8m mobiles in the second quarter of 2005.

Sales of smartphones – led by Nokia’s flagship Lumia devices – rose to 7.4m from 6.1m in the first quarter but analysts’ expectations of 8.1m were missed. The low-end devices were also experiencing weak sales as Android-based phones reigned the market.

Stephen Elop, chief executive, said in a statement for Financial Times: “Our mobile phones business unit started to demonstrate some signs of recovery in the latter part of the second quarter following a difficult start to the year . . . While we are very encouraged by the consumer response to our innovations in this price category, our mobile phones business unit is planning to take actions to focus its product offering and improve product competitiveness.”

Meanwhile, another telecom company – Ericsson, disappointed with second-quarter profits significantly below expectations, underlining the fierce competition in the telecoms equipment sector.

Ericsson has performed better than European rivals such as Alcatel-Lucent and Nokia Siemens Network in the face of sustained competition from Chinese groups such as Huawei but significant improvement awaited by investors is still missing.

The telecom equipment provider has focused on providing equipment to help operators get better geographical coverage, a less profitable business than increasing network capacity. But it said the mix of projects “started to shift slightly” towards capacity during the second quarter.

Both companies are challenge by the unfavorable economic conditions and its interesting to see how they would manage to deal with current conditions in order to turn around profits and share price.