Nokia stumbles in China comeback as phones miss New Year

Supply Constraints

Nokia acknowledged last month that supply constraints have held back sales, saying it is working to overcome the issue. James Etheridge, a Nokia spokesman, declined to comment on shipments to China Mobile or reasons for supply constraints.

“We are now building more capacity as we speak to match the demand, and we would expect that at some point in not too distant future, we would be in a situation where we are no longer constrained,” Timo Ihamuotila, Nokia’s chief financial officer, said on a Jan. 24 conference call.

Shares of Nokia have declined for five straight years, dropping more than 80% since Google’s Android software and Apple’s iPhone were unveiled in 2007.

Today, the stock rose as much as 3.9%, and traded 2.6% higher at 3.04 euros as of 5:18 p.m. in Helsinki.

Chief Executive Officer Stephen Elop, who joined from Microsoft in 2010, started betting on his former employer’s operating system after Nokia’s homegrown Symbian software fell out of favor among consumers in Europe and the U.S.

U.S. Focus

Elop made the influential U.S. market a cornerstone to Nokia’s Lumia smartphone strategy, striking deals with the two largest wireless carriers. Still, Nokia’s sales in North America reached just 700,000 handsets last quarter, compared with about 35 million for market leaders Apple and Samsung combined.

While Nokia placed more focus on the U.S., the mobile device market in China exploded. In the past few years, it overtook the U.S., India, and various western European countries as the world’s biggest market. China smartphone shipments will rise 44% to 300 million units this year, IDC forecast Dec. 17.

“Nokia had a massive head start over everybody five years ago, but they let it slip,” Mawston said.

Nokia is re-entering China with more profitable handsets and plans to be more aggressive in lower price points as well, Elop said on Jan. 24, adding demand was outstripping supply.

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