Further news today that Nokia is having a difficult time in the market. The Finnish giant, while still selling over 83 million phones last quarter, has been working through its cash reserves at a prodigious rate. If this trend keeps up, and sales of its Windows Phone handsets don’t turn a profit, analysts say that it could use up its nearly five-billion euro cash reserve by the end of 2013.
While Nokia wants to sell nearly 20 million Windows Phone devices by the end of this year, and 46 million by the end of next, it seems unlikely that they can offset the massive drop-off in Symbian sales. Its only new high-end Symbian device, the Pureview 808, won’t be widely available, and can’t compete on a profit basis with stalwarts such as iPhone or Android.
Nokia’s goal of improving cash flow — lowering costs and continuing to be financially strong and independent — are less about selling phones and more about making profit off high-margin smartphones like they were doing in years past. The number of Symbian smartphones sold in Q1 2012 was less than half of a year ago, and the company sold 24 million fewer overall devices in the same period.
Investors are also shying away from Nokia at the moment, with both Moody’s and Standard & Poors downgrading the company’s credit rating.
But the trend is not entirely negative. Nokia is the shining light in the Windows Phone world, propped up (and paid $1 billion per year) by Microsoft who seems to be in the mobile game for the long haul. There is no question that both companies are vying for that coveted “third horse” in the smartphone race, and with the recent market share declines made by RIM, it appears companies are up to the challenge. Furthermore, Nokia has entered into exclusive agreements with app developers to bring big-name brands such as Groupon, ESPN and PGA Tour to the Windows Phone app store.
Ultimately, though, if things don’t work out for Nokia independently, they could always be swallowed up by Microsoft, whose former executive Stephen Elop is now the Finnish company’s CEO. We’re crossing our fingers that the worst is over for Espoo, who have been making some excellent products in the Lumia 710, 800 and 900 recently.
Source: Reuters
