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Nokia CEO Aims To Drive Down Prices Of Its Flagship Phones

04/19/2012 | 09:21am US/Eastern
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By Sven Grundberg

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Stephen Elop, the chief executive of struggling handset maker Nokia Corp. (NOK) said the company aims to drive down the prices of its new Lumia family of mobile phones so as to compete better against Asian rivals on emerging markets.

Speaking to reporters after revealing the company suffered losses approaching EUR1 billion in the first three months of the year, the CEO said Nokia will deepen its cost cutting, and sell off non-core assets as it strives to recover its lost profitability.

Nokia has been losing market share in Western markets since the introduction of Apple Inc.'s (AAPL) iPhone in 2007, swiftly followed by other high-end smartphones using Google Inc.'s (GOOG) mobile phone software Android produced by Asian manufacturers.

Now its bread-and-butter revenue from sales of basic phones in Asia-Pacific, the Middle East and Africa is under threat from the arrival of cheap Android-powered smartphones at the low-end of the market as well.

"The price point of Android devices from a variety of manufacturers is quickly being pushed down," Elop said, adding there are gaps in Nokia's line-up of phones that it needs to fill swiftly.

One of the main competitors on emerging markets is Samsung Electronics Co. Ltd. (005930.SE), a company that most observers say will surpass Nokia as the world's largest maker of phones by volume this year.

"Samsung plays a very strong role in this space and is one of our a principal competitors," Elop said.

Nokia will introduce new phones with enhanced technical capabilities for emerging markets in the coming weeks, Elop said. And it will focus on introducing cheaper handsets in its flagship range of Lumia smartphones, running Microsoft's Windows Phone operating system.

"A very clear part of our strategy is to drive the prices of our Lumia devices deeply down, so we can compete effectively," Elop said, but he declined to specify exactly when Nokia plans to unveil these new cheaper Lumia phones.

Nokia's net loss widened to EUR929 million from a EUR344 million net profit for the same quarter last year, against expectations for a EUR554 million loss. Revenue dropped 29% to EUR7.35 billion.

"Clearly we're disappointed with our performance in the first quarter," Elop said, adding however that results weren't all bad.

In the first quarter Nokia sold more than 2 million of its new Lumia devices at an average selling price of approximately EUR220.

"The actual sales results [for the Lumia devices] have been mixed," Elop said "We are exceeding expectations in the U.S., but in other markets like in the U.K. for example, its harder," he added.

Elop added that it plans to launch a second wave of Lumia advertising in the second quarter.

-By Sven Grundberg, Dow Jones Newswires; +46-8-5451-3098; sven.grundberg@dowjones.com

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