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Nokia teeters on the edge with abysmal results
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Old 20th April 2012, 07:01   #1
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Default Nokia teeters on the edge with abysmal results

Nokia has announced its financial results, and they are pretty grim for the Finnish phone maker.

Operating losses for the first quarter totalled a massive €1.34 billion ($1.76 billion) as the firm took a battering from its competitors.

This compares with an operating profit of €439 million ($576 million) in the same period last year as the “burning platform” CEO Steven Elop took over threatens to sizzle to a crisp.

Revenues were also down 29 percent to €7.39 billion ($9.7 billion) amid rumours of a staff cull.

Earlier in the week investors were warned to stay away with its rating lowered to one above “junk” by Moody’s Investors services.

“We are navigating through a significant company transition in an industry environment that continues to evolve and shift quickly,” Elop said in a statement upon announcement of the results.

Elop cited “greater than expected competitive challenges” for seeing the phonemaker dip into a large loss.

Despite the decent reception of the Lumia devices, some reception hiccups aside, it seems that there is still a long way to go if Nokia is to keep fighting.

The firm still claims to have €4 billion of net cash on its balance sheet, but with a few more performances like this it will be back to making rubber boots for the Finnish firm.

Part of the problem has also been the attack on its low end phone business. Nokia has always performed well in India, for example, but it is in emerging markets like this that Nokia has faced a stiff challenge from cheaper Android handsets.

Elop says the firm will focus efforts in the “low-end of smartphones and feature phone assets to drive improved business results and conserve cash”. This will mean continuing to renew its Series 40 offerings which have proved popular.

At the high end, the firm is struggling to differentiate itself despite ad campaigns trying to highlight how one shiny touchscreen phone can be different from another. Customers are repeatedly leaning towards Android and iOS rather than Windows.

If it does not manage to solve its conundrum soon, the promise of a powerful Nokia / Windows partnership could soon be at an end.

According to uSwitch mobile expert Ernest Doku, Nokia will have to move fast to avoid disaster.

"This massive net loss proves Nokia's illustrious past as a top mobile manufacturer counts for nothing on the cutthroat smartphone scene," he told TechEye.

"The Finnish firm's great white hopes, the new flagship Lumia 900 and Lumia 710, are slick and well-made and the Windows Phone platform performs on a par with the best Android devices. But whether or not these will improve Nokia's performance going forward remains to be seen."

He reckons that putting all of its eggs in one basket is not helping its survival prospects.

"You do get the sense that Nokia has pinned all its hopes on one flagship phone, and if you're not Apple that's risky game play. This is something Samsung has recognised, hitting the market with its fleet of Galaxy handsets," he said.

In the low end segment Nokia is also in trouble.

"Nokia's Asha phones are popular in developing markets but this is fast becoming just as competitive as the high-end smartphone scene in the developed world," Doku said.
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