How painful can it get? After Nokia’s post-Easter profits warning,
long-suffering investors in the Finnish mobile phone maker were gritting
their teeth in advance of yesterday’s first-quarter 2012 earnings.
Sadly, there was little in them to help anyone sleep easier – and Nokia’s
battered share price, which has halved during the past year, slid a touch
further. Sales of smart devices were down 52 per cent from a year ago, and
mobile phones 32 per cent – contributing to an operating loss of €1.3bn..
In greater China – Nokia’s second-biggest market after Europe a year ago –
combined devices and services sales were only €577m, compared with €1.9bn in
the first quarter of 2011.
Lumia and Symbian
The problem is that Nokia’s difficulties are now multiple. Ramping up the new
Windows-based Lumia smartphones, launched in October, while shifting away
from the previous Symbian system remains a huge challenge. But the blurring
of the smartphone and feature phone markets – due to the emergence of
cheaper smartphones and the development of feature phones with more
smartphone-like qualities, such as touchscreens – is undercutting its mobile
business, too.
The response of Stephen Elop, the chief executive who spearheaded the Windows
leap after joining Nokia from Microsoft, is to push faster, expand market
coverage, add features and address product gaps. He also talks of asset
sales and more cost-cutting – although details are scant – as Nokia’s cash
cushion (down 24 per cent to a net €4.9bn in a year) starts to be eroded.
It could all come good - and pigs could fly. Pundits are proffering
alternative strategies, from a more selective approach to products and
markets to a radical rethink of the choice of a smartphone operating system.
None is easy. Mr Elop may have a little more time to produce results but the
clock is ticking.
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