* Analysts say Nokia has until year end to turn business
* Q1 net loss 1.57 bln euros vs 231 mln profit yr ago
* Phone sales down 24 pct, sales in China down 70 pct
* Sales chief Colin Giles to leave in June
* Shares close down 3.6 pct
(Adds analyst comments on CEO, updates shares)
By Tarmo Virki
HELSINKI, April 19 Nokia dropped its
sales chief and promised to slash more costs, as Chief Executive
Stephen Elop battles to reinvent the cellphone maker to compete
with smartphone rivals.
The Finnish company, which is expected to be overtaken as
the world's biggest handset maker by Samsung Electronics
, swung to a net loss of 1.6 billion euros in the
first quarter, hit by falling sales and heavy restructuring
Analysts said Elop has until the end of the year to improve
sales of new Lumia smartphones - Nokia's main weapon in its
fight against Apple and Samsung - before investors
start to question his position.
Elop launched Nokia's turnaround plan in February 2011 by
switching to Microsoft's Windows operating system, in a
bid to make its phones more competitive against Apple's iPhone
and Samsung's Galaxy. Since then, its shares have crashed by
two-thirds as investors doubt whether the strategy will work.
Last week, Nokia said sales of the Windows-based Lumia phones
fell far short of analysts' estimates, raising fresh concerns.
Nordea analyst Sami Sarkamies said on Thursday Elop had one
chance to show he had made the right choice in picking Windows
over other options like Google's Android software.
"Elop's faith is fully married to the Windows phone
strategy. If it fails, he fails and I don't think he will get a
second chance," he said. "If there is no significant improvement
during the autumn or towards the end of this year then it will
be time to draw conclusions."
Nokia made a loss of 0.08 euro per share for the first
quarter, 1 cent wider than a Thomson Reuters StarMine forecast.
It warned last week of losses in the first two quarters of the
"Clearly we are disappointed by our performance in the first
quarter," Elop said on Thursday.
SALES CHIEF EXITS
Nokia said Colin Giles, head of sales, would leave the firm
in June, as it restructures the sales team. Nokia's
first-quarter cellphone sales fell 24 percent from a year ago.
The company said Giles was leaving to spend more time with
his family and would not be replaced. His boss, markets unit
chief Niklas Savander will take on Giles' duties.
China-based Giles had worked at Nokia since 1992 and played
a key role in building the company's business in Asia - a region
where it now faces tough competition from lower-priced rivals.
Sales in China fell 70 percent in the first quarter from a
Nokia said it would announce details of extra, substantial
cost cuts soon.
Its shares closed down 3.6 percent at 2.92 euros, valuing
the firm at around 11 billion euros.
Some analysts say the shares are extremely undervalued,
taking into account nearly 5 billion euros of cash and its large
"Nokia's patent portfolio's value is probably over 5 billion
euros. Nokia's current valuation is basically patents plus net
cash position," Sarkamies said.
Others said Nokia's management was not getting enough credit
for the changes implemented over the past year. IDC analyst
Francisco Jeronimo noted that Google's Android took time to take
off as well.
"Nokia is doing quite well by shipping 2 million Lumia
devices in the quarter. It took five quarters for Android to
reach the 2 million mark shipments a quarter," he said.
Gartner analyst Carolina Milanesi said Elop should be given
more time to execute plans for new phones later this year.
"It is too early to be talking about a new CEO. I would say
Elop has until February 2013 - two years from when it all
started - to prove the strategy was the right one," she said.
"This timing gives him the new version of the Windows phone
operating system and the holiday season."
($1 = 0.7621 euros)
(Additional reporting by Terhi Kinnunen; Writing by Ritsuko
Ando; Editing by Erica Billingham)