Nokia Shares Plummet But Its Basic Phone Lines More Profitable Than Smartphones

As Nokia tries to boost sales after its plummeting performance, Nokia’s basic phone lines are generating better operating profits than its iPhones.

Nokia’s Asian margins for both basic and iPhone lines have been shrinking since it has lost against its rivals, Samsung Electronics, HTC and Apple. Apple, for instance, has robbed

Nokia of its share of the smartphone market.

Its operating margin for smartphone fell 6.2 percent during the first quarter, a big drop from 10.4 percent last year while its basic phones operating profit margin fell to 16.5 percent from 19.4 percent.

Nokia has been trying to address this declining market share by focusing on mid-tier price points and price cuts. They believe this has a direct impact on its margins and profits. Together with this strategy is Nokia’s switch to Microsoft’s Windows software but will only be available late of this year.

Photo Credit: WikiMedia Commons

However, Nokia’s share price still fell and was halved since February after unveiling its use of Windows software. Many worry that Nokia will lose more of its market share before its new phone lines reach stores and might not be able to recoup the losses.

Shares in Nokia were 2.1 percent higher at 3.88 euros with the help of WestLB. WestLB upgrades Nokia’s stock believing that all negative news had now been priced into the shares and roughly in line with a rally in technology shares.

Nokia is expected to report a sharp fall in second-quarter results when it reports earnings on July 21, 2011.