Finnish mobile phone manufacturer Nokia (NYSE:NOK) announced on Thursday that it recorded a net loss of 929 million euros ($1.2 billion) in the first quarter of this year, as its sales, especially in the smartphone market, decreased by 29% to 7.354 billion euros. Nokia’s shares dropped more than 3.5% on the Helsinki stock exchange as the Finish company is in a tough competition with Android phone makers, such as HTC and Samsung, and Apple’s iPhone.
Business Insider writes that Nokia could go bankrupt because it will soon run out of cash. Nokia still has a balance of 4.9 billion euros (cash minus debt) and 9.8 billion total cash, which is looks a lot, but the company, writes the publication cited, lost a lot of money going from the comfort to have money to losses. Last year, Nokia has “burned” 1.5 billion euros, of which 700 million euros in the last quarter. If it will maintain this trend, the company will be, in seven quarters, that means in less than two years running out of cash.
The cash statement has already made Stephen Elop, CEO of Nokia, to talk about money preservation. He described the first quarter results of 2012 “disappointing” after he admitted that Nokia is facing greater challenges from its competitors. The losses announced by Nokia for Q1 2012 is in contrast with 344 million euros net profit in Q1 2011. Also, losses of the world’s largest producer of mobile phones are exceeding analysts’ estimates surveyed by Dow Jones Newswires. The analysts predicted on average a loss of 554 million euros.
Nokia also announced that in the first three months of this year sold 82.7 million handsets worldwide, down from 108 million in the first three months of 2011. By region, sales of Nokia in Europe decreased by 32% in the first quarter to 15.8 million units, while the Chinese market has seen sales of Nokia phones dropping by 62% to 9.2 million units.
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